El Salvador was the first country to accept bitcoin as legal tender, which encouraged other countries to think about the advantages of officially recognizing this cryptocurrency. Paraguay is currently studying the possibility of bitcoin becoming its main source of income; in that country, the approval of a law that functions as a “regulatory framework” for digital mining activity is currently being discussed, which is considered an “industry of national interest.” This is a bill that sees Bitcoin as a way to boost foreign investment in the country.
Legislators are promoting this bill presented to the Congress of the Republic of Paraguay for discussion, which aims to regulate bitcoin and other cryptocurrencies in Paraguay. It is important to note that Paraguay has many renewable energy systems, which makes it a great alternative to house large “mining farms” and produce the Hash Rate required by the Bitcoin network (currently Paraguay has the second generating dam of electric power in the world).
Benefits of the Bitcoin Law
The goal of the proposal is for the State to recognize cryptocurrency mining as an industry; in this way, the miner would be within a regulatory framework, eliminating the existing informality in this field. The law would bring better benefits through good infrastructure, the generation of employment, payment of taxes for the importation of equipment, attracting foreign investment, and the possibility that mining ends up boosting the Gross Domestic Product (GDP).
In the case of minors, the benefits would be that the company will be able to have bank accounts to make payments, have better electricity rates and facilities to import and pay the ASIC (Integrated Circuit for Specific Applications) equipment by having the digital mining activity the character of “industry.” This law will not apply to small miners, which means that anyone can “mine from home” without a license, as long as they have a small amount of equipment operating.
State entities involved
The law includes four state entities: the Ministry of Industry and Commerce, the National Electricity Administration (ANDE), the Secretariat for the Prevention of Money or Property Laundering (SEPRELAD), and the National Securities Commission. The first two would have a greater range of action over Bitcoin and mining activity in general since the Ministry of Industry would be in charge of issuing licenses, supervision, registration, and control of all mining activity, verifying the operation of computer machines. Whose sole purpose would be mining?
The Ministry of Industry would also have the function of technical training for mining engineers and applying sanctions for those who break the law. In the case of ANDE, it will establish the requirements for electricity consumption, setting rates to be paid by miners, and the approval or inspection of electrical installations to generate the Hash Rate.
What happens while the law is passed?
As long as the law is not approved, Paraguay will remain in a kind of “gray zone” regarding mining and cryptocurrency banking transactions, since if mining is recognized as an industrial activity, the country’s situation will change completely, since the law would create an ecosystem for the sector to develop.
What do you think about this topic? Do you think that these types of laws that regulate the operation of cryptocurrencies will continue to expand throughout the region?
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