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Last week, Paraguay’s Congress passed a bill that would regulate crypto-related activities in the country.
A crypto bill recently passed by Paraguay’s legislature has now moved the country closer to becoming the latest Latin American and Caribbean (LAC) country to address digital assets by laying down a clear regulatory framework for them.
The new bill, however, highlights the different approaches that markets in the region have taken in terms of handling this growing sector, which have ranged from outright bans to adopting Bitcoin as legal tender.
The proposal, which was originally introduced a year ago, requires Paraguay-based businesses that engage in crypto-related activities to register with the relevant authorities before they start operating.
Legislators have delegated the Ministry of Industry and Commerce (MIC) to coordinate the authorisation, registration, supervision and oversight of crypto firms with a number of other authorities.
Under the proposed text, crypto-asset service providers and crypto miners will be required to register with the MIC. The registration would be based on rules established in line with the act and would be effective for a maximum term of five years.
The MIC will also be responsible for supervising crypto-mining activities and the provision of crypto-asset services and enforcing the law.
In addition, the bill gives the National Securities Commission (CNV) the authority to regulate and supervise issuers, traders, custodians and intermediaries of crypto-assets that are similar to securities.
The CNV will also be required to set out requirements for the registration and public offering of crypto-assets and to determine which crypto-assets can be accepted for trading in the stock market.
The bill would include virtual asset service providers in the scope of the country’s anti-money laundering (AML) laws.
This means that crypto exchanges, crypto-asset managers and crypto-custody service providers will be required to register with the country’s financial intelligence unit, SEPRELAD, and comply with the existing AML rules.
SEPRELAD will establish monitoring and oversight mechanisms for transactions involving crypto-assets and enforce those that fail to comply with the registration requirement.
Mining opportunity
The bill also proposes to create a framework for crypto-mining activities, an activity that legislators believe may have great potential in the country due to its low electricity costs.
Hence, the bill “recognises crypto mining as an industrial and innovative activity”.
Crypto miners would first be required to register with the MIC as a miner and then seek a crypto-mining consumer status from the national electricity agency ANDE.
ANDE would also be required to set out requirements for an industrial energy consumption plan for the crypto-mining industry at the national level.
Following amendments suggested by the lower house, the bill also includes provisions regarding the tax treatment of crypto transactions and requires the tax authority to issue regulations in that regard.
Senator Esperanza Martínez from an opposition party voted against the bill, saying that “cryptocurrency is not an industry” and that it does not give added value nor does it increase employment.
"Both versions of the bill are detrimental to the country," she said.
Similarly, Senator Enrique Bacchetta from governing party Partido Colorado also voted against the bill, agreeing that it does not create jobs.
Following a debate, the Senate agreed to the House version of the bill on July 14. It is now with the President who will decide whether to sign it into law or veto it.
Paraguay is one of many countries in the region that are considering legislative actions to regulate the booming sector. Similar initiatives are also being discussed in Brazil, Argentina, Uruguay and Panama.
