Paraguay strikes a step nearer to regulating digital forex

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On December 17, 2021, the Paraguayan Senate approved a cryptocurrency law introduced in July. The provisions, which define several key terms, including virtual assets and the requirement for licenses to mine cryptocurrencies, will now be forwarded to the Deputy Chamber for further consultation.

Senator Fernando Silva Facetti, the sponsor of the bill, announced that it was passed after a contentious debate in the Paraguayan Senate. According to the senator, the law also aims to encourage the growth of crypto mining activities by using the excess electricity generated in the country.

(1/3) Today, after an intense debate, the Senate @SenadoresPy today approved a new bill that will regulate the industry and commercialization of #crypto-assets #Bitcoin #Paraguay to … (open threat).

– FernandoSilvaFacetti (@FSilvaFacetti) December 17, 2021

The legal text contains a definition for virtual assets, tokens, cryptocurrency mining and VASPs (Virtual Asset Service Providers). It also gives the Ministry of Industry and Trade the power to seek assistance from government agencies outside its borders in implementing the law.

The bill specifically states that mining cryptocurrencies is a legal activity and states that:

“Virtual asset mining is a digital and innovative industry. This industry will benefit from all the incentive mechanisms provided for in national legislation.”

Paraguay supposedly produces more energy than it consumes. As a result, several companies are keen to set up cryptocurrency mining operations there in order to exploit this potential surplus.

Related: Mass adoption threatens as South America’s second largest company accepts crypto payments

In July, Paraguayan Congressman Carlos Rejala and Senator Fernando Silva Facetti presented a Bitcoin (BTC) law to Congress that demonstrates the legislature’s commitment to developing a comprehensive digital asset policy for their nation. The law has now been passed by the country’s Congress and is due to be discussed in the House of Representatives in 2022.

Due to local economic and tax challenges, particularly in Argentina, Venezuela and Mexico, South America has become a viable hotbed for the introduction of cryptocurrencies. For example, when their national fiat currencies collapsed, Argentines and Venezuelans turned to digital alternatives like Bitcoin as the more viable payment option. Others, like El Salvador, have taken a very different approach, with the president encouraging the use of BTC for the people

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