Paraguay could be the first country to follow the example of El Salvador, which made Bitcoin legal tender on 7 September.
Bitcoin law under discussion in Paraguay
The bill to be introduced, now under discussion in the Senate, is expected to cover both the taxation of cryptocurrencies and their regulation, but, according to what the Rio Times newspaper reports, also the possibility that Bitcoin could be recognized as legal tender.
The paper reads:
“The purpose of this draft law is to establish legal certainty, financial and fiscal in the businesses derived from the production and commercialization of virtual assets”.
The bill would also regulate cryptocurrency mining and trading through peer-to-peer exchanges and markets in which participants will have to register as “obligated entities,” parliament member Carlitos Rejala told Reuters in a note.
The same MP who is considered a fierce supporter of cryptocurrency adoption in the country in June had spoken via Twitter about the proposed cryptocurrency law.
Como ya lo decía hace un buen tiempo, nuestro país necesita avanzar de la mano de la nueva generación.
Llegó el momento, nuestro momento.
Esta semana empezamos con un proyecto importante para innovar a Paraguay frente al mundo!
— Carlitos Rejala 🙏🇵🇾🙌 (@carlitosrejala) June 7, 2021
On the other hand, the diffusion of cryptocurrencies in Paraguay, as in all the main states of South America, is constantly increasing, as is their adoption.
Last June, Grupo Cinco, the country’s largest entertainment holding company, announced that as of 24 July its companies would accept cryptocurrencies such as Bitcoin and Ether.
The law would also regulate mining
The new industry reform would also have an impact on mining, which is spreading across the country and could exploit the country’s significant hydroelectric reserves as a clean energy source.
According to initial rumours, the bill would see mining as a “new industrial sector” for Paraguay.
This, according to some observers, could have a major impact on the country’s economy because it could attract many foreign investors, especially after China imposed a ban on the activity in the country.
The underlying proposal would also see the possibility of relocating the miners’ data centres in the areas surrounding the large hydroelectric plants of Itaipú and Yaciretá.
The text of an ad hoc amendment submitted to the cryptocurrency bill reads:
“Cryptocurrency mining makes use of special machinery such as data processors. It could be compared to an electricity-intensive industry, because a large amount of electricity is consumed in the process. It generates a final product that can be traded. It also requires a specialized workforce.”
Future Fintech, a Chinese company that was invited to Paraguay in early November, said it plans to establish a Bitcoin mining facility in the country.
The company’s CEO Shanchun Huang said:
“We plan to carefully evaluate this development opportunity in Paraguay. We will work with our local consultant to examine Paraguay’s hydropower and clean energy resources, locations for the development of a mining farm and the preferential policy treatment we may receive for our capital investment.”