A year has passed since Paraguayan politicians began deliberating on a complete crypto regulatory framework that covers business and trading concerns.
Thursday, the Paraguayan Senate approved a measure creating a tax and regulatory framework for cryptocurrency and crypto mining enterprises.
The measure, proposed by Senator Fernando Silva Facetti in July 2017 and approved by the House of Representatives in May before reaching the Senate, seeks the establishment of a Ministry of Sector and Commerce (MIC) to regulate crypto industry service providers. President Mario Abdo Bentez is just a step away from signing the measure into law.
The law refers especially to crypto mining, commercialization, intermediation, exchange, transfer, custody, and/or administration of crypto assets or instruments that provide control over crypto assets, according to a May notification from Congress.
ABC, a local news source, stated on Thursday that enterprises operating in the crypto market would be taxed similarly to those dealing in securities. Consequently, the Undersecretary of State for Taxation will exempt them from paying value-added tax (VAT), but they will be subject to income tax.
The measure addresses the relationship between cryptocurrency miners and local power providers. The National Power Administration (ANDE), Paraguay’s national electricity authority, will compel prospective mining enterprises to publish their energy usage schedule. If it is discovered that miners are utilising more energy than anticipated, ANDE may shut off their power supply.
Although the measure says that miners’ energy expenses would be subsidised, they will pay a 15 percent higher rate than other sectors.
Senator Facetti reportedly said that changes made to the measure over the last year “enhanced the initial concept.”
Senator Enrique Bacchetta, one of the bill’s opponents, allegedly claimed that although regulating the crypto business might increase profits, he questioned if it would also generate employment for his fellow people. Senator Esperanza Martinez echoed Senator Baccetta’s worries, noting that the rate of energy consumption by miners much exceeds the number of employees they would generate.
This makes Paraguay the most recent LATAM country to accept and regulate cryptocurrencies. El Salvador recognised Bitcoin (BTC) as legal tender in 2021, while Brazil, Argentina, and Panama governments are now drafting their own crypto-specific laws.
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