Paraguay’s crypto framework nears law status

Image: Shutterstock

According to a July 14 bill passed by the Paraguayan Senate, a regulatory and tax framework will be set in place for the enterprises operating in the crypto asset and mining sectors. 

The bill was introduced by Senator Fernando Silva Facetti last July and was passed in May by Congress before it was presented to the Senate. The bill required the creation of a MIC or Ministry of Industry and Commerce that will supervise the service providers of the crypto industry. The bill is just one step short of being sanctioned by the President, Mario Abdo Benitez, as a law.

A notice released by Congress in May notified that the bill is concerned about specific sectors like exchange crypto mining, intermediation, commercialisation, custody, transfer and management of crypto assets or instruments that allow control of crypto assets.

ABC, a local news channel on July 14, reported that the companies involved in the crypto industry would have regulations for tax purposes equivalent to those industries dealing with securities. Hence, they will be relieved from paying Value Added Tax or VAT by the Undersecretary of State for Taxation but will be considered for income tax.

The bill examines how local power suppliers and crypto miners should interact. Mining projects anticipated to start their operations in the near future will be required to outline their energy consumption schedule to Paraguay’s national electricity regime, National Electricity Administration (ANDE). If the miners consume more than they promised, the ANDE may cut off their electricity supply. 

The bill says the government will subsidise energy costs for the miners. However, they will pay 15 percent higher than the other industries. According to Senator Facetti, the changes made in the bill last year have enhanced the bill’s impact and scope concerning the crypto sector.

Senator Enrique Bacchetta expressed his concerns by stating that regulating the crypto asset industry may generate greater profits, but it may not generate employment. Senator Esperanza Martinez backed Senator Baccetta by saying that the energy consumption rate for mining surpasses the rate of employment it will create.

Paraguay has become the latest LATAM nation to adopt crypto assets with this bill. El Salvador adopted Bitcoin in 2021. Brazil, Argentina and Panama are still working on the regulations for crypto assets.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash