The Chamber of Deputies of Paraguay passed legislation governing crypto mining and trading by 40-12 on Wednesday. The bill passed with revisions in the nation’s Chamber of Deputies, and it will now go back to the Senate.
The Senate approved a bill with very identical provisions back in December. Yet, amendments by the Chamber of Deputies mean that the Senate must approve the bill again.
The Senate would share the proposed law with the executive branch for scrutiny after the Senate votes to accept the amendments. The executive branch has not indicated whether it will sign or reject the legislation by now.
Carlos Rejala, one of the bill’s authors, stated that the legislation’s goal is to attract international miners to Paraguay. The country boasts of the lowest electricity rates in Latin America at approximately 5 cents per kilowatt-hour. Rejala made this statement in an interview at the onset of developing this bill.
Paraguay set a procedure for mining
If Paraguay passes the bill into law, both individual and corporate miners will need to follow a procedure before mining. The first step will be applying for clearance to consume industrial amounts of energy and applying for a license. The proposal also creates a registry for anybody or a legal firm that intends to provide crypto trading or custody services for third parties. Nevertheless, the idea of exchange is not included in the registry.
During the discussion, Congressman Tadeo Rojas (ANR-Central) presented an argument against the law. He pointed out that the budget committee of the Chamber of Deputies rejected the bill through a recommendation.
Rojas also mentioned that the effect on job creation is minimal. Besides, the congressman showed concern about the mining industries’ required amount of energy.
Congressman Sebastián Garca (PPQ-Capital) countered Rojas’s argument in support of the idea. He stated that the bill would establish limits on energy consumption. He said,
The bill will ensure that the amount of energy consumed would be proportional to the available amount of energy
Congressman Sebastián Garca
From closer sources, the legislation intended to govern cryptos and ensure revenue. It mentioned areas of registration with the country’s Undersecretariat of State Taxation. The accurate translation of the text contained within the paper said that the goal of this draft law is to ensure legal certainty. Besides, it checks on finances in the enterprises generated from the production and marketing of virtual assets.
Paraguay’s proposed law includes the registration of crypto enterprises
The law would also control the mining of crypto. Moreover, it would also affect trading through exchanges and peer-to-peer marketplaces. Participants in these markets will have to register as “obligated subjects.” Compared to the neighboring Latin American nation of El Salvador, Paraguay doesn’t intend to make crypto a legal tender.
In particular, the justification for the bill is that crypto mining is an industrial activity. Thus, it should fall under the jurisdiction of the Ministry of Industry and Commerce. The proponents say that crypto mining has all it takes to fall under industrial activity. For instance, it requires the expenditure of capital and the employment of labor. Besides, it relies on the operation of machinery and the building of civil infrastructure.
Earlier, Congressman Carlos Rejala, the mover of the bill, told news desks the details of the law. He said that the law would allow crypto mining or exchange companies to finance their operations in Paraguay with digital assets. Moreover, the law would allow these firms to remit dividends abroad and capitalize on their crypto profits in domestic banks.
Latin America embraced virtual assets at a higher rate. The rapid rise of crypto and digital assets in the region fueled the startup scene. From $68 million in 2021 to $650 million in 2021, the capitalization of crypto companies in Latin America increased by 10.