The Paraguayan Senate passed a bill on July 14 launching a tax and regulatory framework for businesses operating in the cryptocurrency and the crypto mining sectors. Paraguayan legislators have considered for a year on a comprehensive crypto regulatory framework that includes considerations for businesses and traders.
The bill, announced last July by Senator Fernando Silva Facetti and passed in Congress in May before reaching the Senate, calls for the formation of the Ministry of Industry and Commerce (MIC) to oversee crypto industry service providers. The bill is now one step away from being sanctioned as law by President Mario Abdo Benítez.
In May a notice from Congress stated that the bill affects specifically crypto mining, commercialization, intermediation, exchange, transfer, custody, and/or administration of crypto assets or instruments that allow control over crypto assets.
According to ABC, a local news outlet on July 14 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 rule.
The bill reportedly considers how crypto miners should intermingle with local power suppliers. Potential mining operations will be required to report their energy consumption schedule to the National Electricity Administration (ANDE), Paraguay’s national electricity regime. If miners are noticed to be consuming more electricity than permitted, ANDE may cut off their electricity supply.
While the bill specifies that energy costs for miners will be sponsored, they will pay a rate 15% higher than other industries.
According to reports, Senator Facetti said that changes made to the bill over the last year “improved the original project.”
Critics of the bill, such as Senator Enrique Bacchetta, reportedly stated that while regulating the crypto industry would lead to greater profits, he questioned whether it would actually create jobs for his fellow citizens. Senator Esperanza Martinez seconded Senator Baccetta’s concerns, demanding that the energy consumption rate from miners far outpaces the number of jobs they would create.
This makes Paraguay the latest LATAM nation to take a hop forward in crypto adoption and regulation. El Salvador approved Bitcoin (BTC) as a legal currency in 2021, and the governments of Brazil, Argentina, and Panama are all working on their own crypto legislation.
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