Paraguay’s cryptographic framework one step away from becoming law
On 14 July, the Paraguayan Senate passed a bill establishing a tax and regulatory framework for companies operating in the cryptocurrency and crypto-mining sectors.
The bill, introduced in July last year by Senator Fernando Silva Facetti and passed in Congress in May before reaching the Senate, requires the formation of the Ministry of Industry and Trade (MIC) to oversee crypto-industry suppliers. The bill is now one step away from being ratified as law by President Mario Abdo Benítez.
A message from Congress in May stated that the bill specifically applies to cryptocurrency mining, commercialization, dissemination, exchange, transfer, custody and / or administration of cryptocurrencies or instruments that allow control over cryptocurrencies.
The local news agency ABC reported on July 14 that companies operating in the crypto industry will be treated in the same way as those dealing with securities for tax purposes. As a result, they will be exempted by the Secretary of State from tax from paying VAT (VAT), but will be included in the income tax scheme.
PARAGUAY: #Bitcoin and crypto companies exempt from paying VAT on a newly approved bill.
– Bitcoin Archive (@BTC_Archive) July 16, 2022
The bill allegedly assesses how crypto miners should interact with local power suppliers. Potential miners will be required to report their energy consumption plan to the National Electricity Administration (ANDE), Paraguay’s national electricity regime. If it turns out that miners are using more power than planned, ANDE could cut off the power supply.
While the bill stipulates that the energy costs for miners must be subsidized, they will pay a rate that is 15% higher than other industries.
According to reports, Senator Facetti said changes made to the bill over the past year “improved the original project.”
Opponents of the bill, such as Senator Enrique Bacchetta, reportedly said that while regulating the crypto industry would lead to greater profits, he questioned whether it would actually create jobs for his fellow citizens. Senator Esperanza Martinez informed Senator Baccetta’s concerns, claiming that the energy consumption of miners far exceeds the number of jobs they would create.
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This makes Paraguay the last LATAM nation to take a leap forward in crypto adoption and regulation. El Salvador introduced Bitcoin (BTC) as the legal currency in 2021, and the governments of Brazil, Argentina and Panama are all working on their own crypto legislation.
