Paraguay's Digital Money Law Legalization Will Become The Newest Crypto Hot Spot In Latin America

Paraguay's parliament passes the Crypto Money Act. (photo: twitter @DiputadosPy )

JAKARTA - Paraguay is seen by many as a potential hot spot for cryptocurrency adoption due to its low electricity costs and relatively lenient taxation. The Paraguayan government has also recognized this opportunity by pushing new laws around digital assets.

On May 25, a bill regulating the trading, mining and storage of cryptocurrencies was approved by the Paraguayan Congress by a vote of 40 to 12. The bill must now be ratified by the Senate to finally reach Paraguay's President, Mario Abdo Benítez.

If ratified, the bill will apply to any individual or organization in Paraguay involved in the mining, commercialization, trading, transfer, production, storage or administration of cryptocurrencies and related functions.

The law also proposes financial and legal guarantees for businesses and individuals, while also imposing restrictions on electricity spending and taxation issues.

For example, a translation of article 11 of the law states: “Crypto mining is recognized as an industrial and innovative activity. This activity will be the beneficiary of all the mechanisms and incentives foreseen in the national legislation”

This rule is not without resistance. Both the Central Bank of Paraguay and the budget commission have expressed their disapproval of digital currencies. They even called the move a “high-risk project with no benefit to the state.”

According to a Cointelegraph report, this statement is also accompanied by suspicions that cryptocurrencies are helping criminal enterprises and substantially increasing electricity costs.

Paraguay is one of several Latin American countries that is actively exploring digital asset regulation. El Salvador started the legalization trend in June 2021 by recognizing Bitcoin (BTC) as legal tender. Other countries with ongoing crypto regulatory discussions include Brazil, Argentina, Uruguay and Panama.