Crypto framework is one step away from becoming law in Paraguay

The Paraguayan Senate has recently passed a bill on Thursday that creates a tax and regulatory framework for businesses operating in the cryptocurrency and the crypto mining businesses.

Introduced last July by Senator Fernando Silva Facetti, the bill was passed in Congress in May before reaching the Senate, calling for the formation of the Ministry of Industry and Commerce (MIC) to regulate crypto industry service providers. The bill is now one step away from being approved as law by President Mario Abdo Benítez.

The Congress stated in May that the bill relates specifically to crypto mining, commercialization, intermediation, exchange, transfer, custody and/or administration of crypto assets or instruments that allow control over crypto assets.

Local news outlet ABC reported on Thursday that companies that operate in the crypto industry would be treated the same as those dealing with securities for tax purposes. As a result, they will be exempted by the Undersecretary of State for Taxation from paying a value-added tax (VAT) but will be included in the income tax regime.

The bill takes into consideration how crypto miners should interact with local power providers. National Electricity Administration (ANDE), Paraguay’s national electricity regime will require related mining operations to report their energy consumption schedule. ANDE may cut off their electricity supply if the miners are found to be consuming more electricity than anticipated

Although the bill stated that energy costs for miners will be subsidized, they will pay a rate 15% higher than other industries.

Senator Facetti said that changes made to the bill over the last year “improved the original project.”

Those opposed to the bill, such as Senator Enrique Bacchetta, reportedly stated that although regulating the crypto industry would lead to greater profits, he questioned whether it would actually create job opportunities for his fellow citizens. Senator Esperanza Martinez supported Senator Baccetta’s concerns, stating that the energy consumption rate from miners far exceeds the number of jobs they would create.

The move makes Paraguay the latest LATAM nation to adopt and regulate crypto. The governments of Brazil, Argentina and Panama are all developing on their own crypto legislation while El Salvador accepted Bitcoin (BTC) as legal currency in 2021.