Paraguay Finally Set to Regulate Crypto despite Opposition from the Central Bank

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Crypto Regulation
Paraguay Finally Set to Regulate Crypto despite Opposition from the Central Bank

Despite opposition from the country’s central bank, Paraguay‘s Chamber of Deputies has approved the development of a crypto regulation bill for submission to the Senate. This move was started in June 2021 by Paraguay’s lawmakers, reports The Block on May 27, 2022.

Paraguay Moves Ahead with Crypto Regulation Push

Per sources close to the matter, on May 25, deputies voted 40 to 12 in favor of moving the bill forward with changes during a special session. The draft will now be sent back to the Paraguayan Senate for further consideration.

The bill, which was first introduced in Paraguay’s Senate in July 2021, aims to control industrial actions involving digital assets. This would entail licensing and supervising crypto-focused businesses, and crypto mining companies operating in Paraguay. However, the proposed regulation does not include making bitcoin a legal tender in the state.

“The purpose of this regulation is to control the manufacturing and commercialization of digital or crypto assets in order to ensure legal, monetary, and financial security to the companies derived from their manufacturing and commercialization,” the first article of the bill states.

Before voting, lawmakers debated the bill extensively, with some raising worries such as Bitcoin’s energy use and its possible use as a money-laundering tool by bad actors. Deputy Basilio Nunez, for example, asserted that the crypto regulation push would “favor organized crime” and questioned El Salvador‘s use of bitcoin as legal tender.

However, Congressman Carlos Rejala was not convinced. “Totally the opposite,” he said, explaining that the law will be primarily focused on the tracking of digital assets. He also stressed that the regulation would not make cryptocurrencies legal tender but would instead regulate the digital asset industry.

BCP Still Wary of Bitcoin 

Even as all deputies agreed to advance the bill, not everyone is excited about the prospect of Paraguay trying to regulate the cryptocurrency sector. 

It will be recalled that the country’s central bank (BCP) released a statement in March 2022, stating that it is unclear whether the benefits of trying to regulate the digital asset industry would outweigh the drawbacks such as “electrical energy consumption, lack of fame, and price levels for the monetary system, which may be significant.”

The BCP concluded in its assessment that “crypto-assets do not fulfill the basic capabilities of cash and depict high-risk investments.” They further stated that “The actual intent to regulate the industry and commercialize crypto, as stated in this invoice, may create a false sense of security regarding the possession of any such asset.”

The BCP reportedly reaffirmed this position just last week when central bankers met in El Salvador to discuss monetary inclusion. While many people assumed the event was predominantly about bitcoin (BTC), the bank stated clearly that it was not about cryptocurrencies and that it did not intend to discuss them. 

The financial institution, in addition, reminded people that cryptocurrencies were not legal tender in Paraguay by referencing a press release from 2019.

As bitcoin and other cryptocurrencies continue their march towards mainstream adoption, more and more nations are now making efforts to introduce amenable rules that would support the growth of innovative technologies within their shores.

As reported by crypto.news in April 2022, the Central African Republic became the second sovereign state in the world to make bitcoin a legal tender. Presently, a good number of jurisdictions around the world now accept bitcoin payments for taxes and other purposes.

Ogwu Osaemezu Emmanuel

Ogwu Osaemezu Emmanuel is a graduate of Mass Communication and Media Studies. He joined the blockchain movement in 2016 when a friend of his introduced him to an investment platform accepting bitcoin. He has never looked back since then. Emmanuel believes the world needs real change and freedom from poverty. He sees crypto and the underlying distributed ledger technology as the catalyst to a better future for all.