After El Salvador and the Central African Republic approved bitcoin as a legal tender, other countries, such as Paraguay, are in a hurry to capture and enforce regulations for this unique asset class.

Latin American countries are taking cryptocurrencies more seriously and are currently working to approve legal and other relevant frameworks.

Due to its cheap electricity and “crypto-friendly” environment, Paraguay has historically been seen as a mining haven for cryptocurrency mining operations.

Despite resistance from the country’s central bank, Paraguay’s Chamber of Deputies on Thursday adopted a plan to regulate cryptocurrency.

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Paraguay has advanced the crypto bill by a majority vote

In a special session, deputies voted 40 to 12 in favor of approving the draft law.

Despite the Senate’s initial adoption of the law in December last year, the Senate will need to reconsider the draft before submitting it to the President for approval of recent amendments to the Chamber of Deputies.

Why did the European Union vote against the de-facto bitcoin mining ban

The law, which was originally filed in the Paraguayan Senate in July last year, aims to regulate commercial activities involving digital resources. It involves licensing and supervising cryptocurrency mining firms operating within the country. The proposed law does not make any cryptocurrency legal tender.

Bill wants to make Paraguay a crypto mining hub

Furthermore, the measure aims to make Paraguay an international hub for miners because of the country’s low electricity rates, which are about five cents per kilowatt-hour, the lowest in Latin America.

The new law requires Bitcoin exchanges to register their businesses as virtual asset service providers with Paraguay’s anti-money-laundering agencies.

The bill states, “The purpose of this law is to regulate the production activities and commercialization of virtual or crypto assets in order to provide legal, financial and financial security to companies benefiting from their production and commercialization.”

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Crypto total market cap at $1.18 trillion on the weekend chart | Source: TradingView.com

Approval for industrial energy use

Individual and corporate miners will have to request approval for industrial power use and then apply for a license if it becomes law.

Bitcoin transaction fees remain historically low despite recent spikes

The proposed law establishes a registry for individuals or legal entities that wish to provide crypto trading or custody services to third parties, but does not include the concept of exchange.

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Nearly half of Paraguay’s Fintech companies enabled digital payments and innovative financial services for businesses and customers in 2020.

Also, 30% of financial institutions provide crowdfunding services and technology. Only 8% of new enterprises use cryptocurrency, according to Statista data.

Featured image from VOI, chart from TradingView.com

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