The Senate of Paraguay approved on Thursday (14) the bill that regulates the cryptocurrency market in the country. The information was confirmed by Senator Fernando Silva Facetti on his Twitter profile, where the legislator commented on the most important aspects of the legislation, which is now heading for presidential sanction.
The draft clearly defines the attributions of the Ministry of Industry and Commerce for the general supervision of cryptocurrency-related services.
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But the main point highlighted by the senator is the energy expenditure in mining. Paraguay has 85% of its electricity coming from Usina and Itaipu and it is cheap enough to enable the country to be a relevant region in Bitcoin mining.
The law allows the excess energy generated to be used by miners at competitive prices. In addition, ANDE, a state-owned electric energy company, will define the commercial parameters, technical conditions and establish special prices for the activity’s energy tariff, which cannot exceed 15% more than the amount charged to the rest of the industry.
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With the new law, crypto companies operating in Paraguay will be exempted from the payment of Value Added Tax (VAT), although they will still have to pay the other fees that exist in the country, according to local newspapers.
1) #Cripto #Paraguay After an intense debate @SenadoresPy, we’ve approved the Bill that regulates #cryptoasset activities. This new law establishes obligations, rights and warranties to investors, to the consumer and the Government…. #Bitcoin pic.twitter.com/ODpQxC3XZy
— FernandoSilvaFacetti (@FSilvaFacetti) July 14, 2022
But the project encountered resistance in the Paraguayan Legislature. Senator Esperanza Martínez, from the FG party, led her bench in a rejection of the initiative, according to the local newspaper ABC .
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The parliamentarian said “it is not an industry” because it does not generate jobs and generates an excessive consumption of the country’s natural resources in having a compensation in the creation of jobs.
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What changes in Paraguay
The our source reported on May 25 the approval of the project in the Paraguayan Chamber of Deputies and interviewed people connected to the local crypto world.
Regulation is viewed favorably by market participants operating in Paraguay.
“This law will provide legal, economic and fiscal security, as well as protection for investors who want to come to Paraguay to invest in this sector,” Juanjo Benitez, CEO of the Paraguayan mining company Digital Assets SA , explained to the Bitcoin Portal.
Bitcoin mining expert Allex Ferreira added that this regulation “will give miners and investors the much-needed legal certainty for any investment. Paraguay takes the lead in Latin America”.
As pointed out by experts, the main benefit of this bill is the creation of a legal framework for the advancement of companies linked to the cryptocurrency sector in the region.
Cryptocurrency exchanges will now be recognized by the government as regulated entities and will need to register as providers of virtual assets at the Secretariat for the Prevention of Money or Asset Laundering (SEPRELAD).
The same obligation will also apply to P2P, as the measure encompasses any person or company that will trade, manage, broker, exchange or store crypto assets for third parties.
The legal apparatus, therefore, should reduce the informality of the crypto sector in Paraguay and serve as an incentive for new exchanges to establish themselves in the country.
Regulation should also be positive for bitcoin miners. Today, mining in the country is not a regulated activity; even so, it has increasingly attracted the attention of miners around the world, including Brazil.
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The big attraction is the cheap electricity, much of it coming from the Itaipu hydroelectric plant, which Paraguay shares with Brazil. Due to the abundance of energy and little demand, the cost of electricity is low, which positively impacts the miners’ bottom line.
The bill also transfers to the National Electricity Administration (ANDE) the responsibility for organizing the supply of electricity to miners.
The entity will establish the conditions under which the supply will be made, as well as the amount that miners will pay for electricity. In this sense, the law establishes that the charge must not exceed a ceiling of 15% of the industrial rate of the current tariff table.
