Paraguay is enhancing its crypto regulation

Paraguay’s Chamber of Deputies approved the advancement of a crypto regulation bill to the Senate this week, despite pushback from the country’s central bank. In the same session on might 25, deputies voted forty to twelve in favor of moving the bill forward with modifications. The project can currently come back to Paraguay’s Senate for additional consideration.

The bill, 1st introduced in Paraguay’s Senate in July 2021, aims to manage business activities regarding virtual assets. This might embrace licensing and management of crypto mining corporations in operation in Paraguay. The planned law doesn’t involve creating any cryptocurrency legal tender.

What does the new crypto bill aim for?

This law manages the assembly activities and commercialization of virtual or crypto assets to ensure legal, money and monetary security to the companies derived from their production and commercialization.

Whereas the bulk of deputies united to advance the bill, not everyone seems to be excited regarding the prospect of Paraguay regulating the crypto sector. The country’s financial institution (BCP) submitted a comment in March oral communication that, in its view, it’s unclear whether or not the advantages Paraguay would receive from regulating the digital plus trade would outweigh cons like electricity consumption, loss of name and prices for the money system, which might be significant.

Crypto assets don’t fulfill the essential functions of cash and represent bad investments. As meant during this bill, the intention to manage the industry and commercialization of virtual assets might generate a false sense of security concerning the holding of this kind of asset.

Electricity consumption and money laundering is concerning

The BCP reiterated this position simply last week once central bankers were meeting in the Republic of El Salvador to debate financial inclusion. While several thought the event was primarily regarding bitcoin, the bank claimed that the meeting wasn’t targeted at cryptocurrencies which it didn’t conceive of discussing at the event. The bank conjointly reminded those that cryptocurrencies weren’t medium of exchange in Paraguay by linking to a press release it created in 2019 about their use.

Lawmakers mentioned the bill at length before voting, raising considerations about problems regarding electricity usage and cash laundering. Deputy Basilio Núñez, for example, claimed that the project could “favor organized crime” and raised concerns about El Salvador’s use of bitcoin as legal tender.

However, Ilich Ramirez Sanchez Rejala disagreed. The opposite, he said, explaining that the law would be targeted on the traceability of digital plus. He conjointly underscored that the law wouldn’t create cryptocurrencies legal tender but rather offer oversight to the digital asset industry.