After working on a comprehensive regulatory framework for a year, the Paraguayan Senate has finally passed the country’s crypto bill.
Final Step – President’s Approval
The regulatory framework developed in the bill includes considerations for businesses and traders conducting crypto mining and other related operations. It recommends the establishment of a Ministry of Industry and Commerce (MIC) to oversee crypto service providers. The bill was first introduced in July 2021 by Senator Fernando Silva Facetti and then subsequently approved by Congress in May 2022. Congress had, in fact, especially pointed out that the framework will aim to regulate crypto mining, commercialization, intermediation, exchange, transfer, custody, and/or administration of crypto assets or instruments that allow control over crypto assets.
Only one step remains for the bill to become law: the final approval from President Mario Abdo Benítez. The bill has also seen support from Presidential candidate Carlitos Rejala, who is also a member of the Chamber of Deputies. Rejala has already tried to introduce legislation in Congress for the adoption of Bitcoin as legal tender and has promised to bring about the change if elected president in 2023.
Taxation And Limitations
As per reports, the framework of the law would include crypto companies under the same umbrella as that of securities for tax purposes. Therefore, they will be exempted from paying the Value Added Tax (VAT). However, the companies will have to follow income tax rules. Furthermore, the bill also lays the ground rules for the interactions between crypto miners and local power suppliers. All mining operations must first submit a report on their energy consumption to the National Electricity Administration (ANDE). Under the regulation, ANDE bears the right to cut off electricity supply to any miners that are exceeding their pre-determined electricity consumption. Even though the bill stipulates that miners can get their energy costs subsidized by the government, they will still be charged a rate 15% higher than other industries.
Job Creation Concerns
However, the bill has had its share of detractors as well. For example, Senator Enrique Bacchetta has been expressing his concerns that the new crypto legislation would create jobs for Paraguayans. His concerns were seconded by Senator Esperanza Martinez, who believes that the effects of the energy-intensive mining operations would outrun any jobs that the industry creates.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
