- A leaked version of
Paraguay’s upcoming crypto bill may put a stop to speculations about its crypto friendliness.
- The bill seeks to give crypto mining the same status as other industrial activities.
- It also wants to have crypto firms register with the government, in order to track, trace and tax such transactions.
The hype around Paraguay becoming the second country to legalise Bitcoin has been building since
leaked draft of the crypto bill that Paraguayan congressman Carlos Rejala plans to introduce in the Chamber of Deputies — akin to India’s Lok Sabha — has no mention of making Bitcoin or any other
cryptocurrency legal in the country.
Instead, it focuses on regulatory purview — specifically when it comes to taxation. The draft, first reported by
Decrypt, requires all crypto companies to be registered with its Undersecretariat of State Taxation.
Tax on crypto mining and crypto trading
While the bill is written in Spanish, a rough translation of the document says that the country is establishing the law to “establish legal certainty, financial and fiscal in the businesses derived from the production and commercialization of virtual assets”.
The bill is meant to regulate both crypto mining and
crypto trading within Paraguay, and will require companies to register as “obligated subjects”.
The document suggests that unlike El Salvador, Paraguay has a lot of the same concerns that some other countries have had with crypto firms — that of taxation. The country seemingly wants to ensure that crypto firms are brought under its tax regime from the get go, and wants to have traceability for such transactions and investments.
The bill also wants to give crypto mining the same status as industrial activity, and put it under the purview of its Ministry of Industry and Commerce.
Lessons from El Salvador
While regulation might be seen as a favourable development, Paraguay may be taking cues from the issues that Salvador’s decision is facing since its own announcement — the same announcement which prompted the 36-year old Rejala to announce his plans of making Paraguay the crypto hub of Latin America.
Como ya lo decía hace un buen tiempo, nuestro país necesita avanzar de la mano de la nueva generación.Llegó el mom… https://t.co/RTdz3zzLrN
— Carlitos Rejala (@carlitosrejala) 1623029331000
According to investment bank
JPMorgan, Bitcoin’s use as a mode of payments may have “potentially significant limitations” due to its lack of liquidity. It estimates that since 90% of Bitcoins in the world are held in crypto wallets. Which means there are not enough Bitcoin to fiat transactions happening for El Salvador to take Bitcoin and use the cryptocurrency alongside the US dollar.
A small survey conducted by the
University of El Salvador suggested that 54% of the country’s citizens themselves are skeptical about Bitcoin coming in as legal tender.
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