After El Salvador and the Central African Republic approved bitcoin as legal tender, other nations, such as Paraguay, are quick to catch up and enforce regulations for this unique asset class.
Countries in Latin America are taking cryptocurrencies more seriously and are currently trying to ratify the legal and other relevant frameworks.
Due to its cheap electricity and “crypto-friendly” environment, Paraguay has historically been viewed as a mining haven for cryptocurrency mining operations.
Paraguay’s Chamber of Deputies on Thursday adopted a plan to regulate cryptocurrencies, despite resistance from the country’s central bank.
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Paraguay advances crypto bill by majority
In a special session, deputies voted by a margin of 40 to 12 in favor of approving the draft of the amended law.
Despite the Senate’s initial approval of the law in December last year, recent amendments from the Chamber of Deputies would require the Senate to reconsider the draft before submitting it for presidential approval.
The law, which was initially filed in the Paraguayan Senate in July last year, aims to regulate commercial activity involving digital assets. This includes licensing and overseeing cryptocurrency mining firms operating in the country. The proposed law does not make any cryptocurrency legal tender.
Bill wants to make Paraguay a crypto mining hub
In addition, the measure aims to make Paraguay an international hub for miners due to the country’s low electricity rates, which are around five cents per kilowatt-hour, the lowest rate in Latin America.
The new law requires bitcoin exchanges to register their businesses as virtual asset service providers with Paraguay’s Anti-Money-Laundering Agency.
“The goal of this law is to regulate the production activities and commercialization of virtual or crypto assets in order to provide legal, financial and financial protection to firms that benefit from their production and commercialization,” the bill states.
Crypto total market cap at $1.18 trillion on the weekend chart | Source: TradingView.com
Authorization for Industrial Electricity Use
Individual and corporate miners must request authorization for industrial electricity consumption and apply for a license if the measure becomes law.
The proposed law also establishes a registry for any individual or legal business that intends to provide crypto trading or custody services to third parties, although the idea of exchange is not included.
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Nearly half of fintech companies in Paraguay enabled digital payments and innovative financial services for businesses and consumers in 2020.
In addition, 30% provided crowdfunding services and technologies to financial institutions. According to Statista statistics, only 8% of new enterprises have used cryptocurrency.
Featured image from VOI, chart from TradingView.com