20 Dec 2021 · 2 min read

Paraguay: Bitcoin & Crypto Mining Bill Passes Senate, Heading to Lower House

Source: AdobeStock / donyanedomam

 

Crypto advocates have secured a remarkable victory in Paraguay, with a piece of crypto mining legislation – a private member’s bill – passing a vote in the Senate with a resounding majority.

Per Criptonoticias, 29 senators voted in favor of the bill – which proposes legalizing but regulating crypto mining, with just eight voting against, as well as six abstentions and two absences. The bill was unveiled several months ago, and was originally the brainchild of an ambitious group of Paraguayan miners in conjunction with the lower house MP Carlitos Rejala.

Rejala’s measure then won the support of the man who became the bill’s champion in the senate – Fernando Silva Facetti. The latter appears to have convinced the upper house of the value of the bill, which proposes to create an above-board, fully regulated crypto mining sector. 

This would be a significant move in Paraguay, which has abundant hydroelectric power. Two of its biggest hydro power stations create a large amount of surplus electrical energy, which currently goes to waste.

Allowing miners – chiefly international pools – to set up shop at data centers near the power plans, the bill’s champions say, will provide a major new source of income for the Latin American nation.

These financial arguments have swayed the Senate, but there are still many obstacles for the bill to navigate before it becomes law: the lower house (the House of Deputies) must vote on it, and the President will also need to approve the measure.

There is also a possibility of regulatory pushback. Late last week, the Central Bank of Paraguay issued an official warning to the public, informing citizens that “bitcoin (BTC) and other similar cryptocurrencies are not considered [legal tender], adding that they have no legal status in the nation and “do not enjoy any state-issued guarantees.”

The bank noted that it is also working on a pilot central bank digital currency (CBDC) project, noting that a bank-issued coin “could be a secure means of payment in tune with a broader digitization of citizens’ daily lives, with all of the advantages of technology, but without the risks associated with private cryptocurrencies.”

The senate’s draft bill has been slightly amended from its original form. The bill seeks to criminalize miners who do not declare their activities to the state. Firms that “produce” and engage in crypto-related “marketing activities” without regulatory permits would also be subject to punishment.

But optimists will be keen to point out that the fact that the bill’s text also specifies that miners’ “products” (i.e. coins)” may be made “freely” “marketable” for “free sale” under “the terms of this law" – in other words, miners must be allowed to sell the coins they mine, so long as they are regulated.

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Learn more: 

- Paraguayan Senate to Debate Taking Bitcoin Mining ‘Out of the Grey Area’
- Russia, Mexico and Paraguay Set off on Different Crypto Paths

- Russia: Total Ban on Crypto Ownership Still on Table, Says Top Official
- Chinese Courts Sentence Crypto Miner, Fraud Rings as Enforcement Continues

- Bitcoin Mining Hash Rate to Double in 2022, Compute North CEO Predicts
- Crypto Adoption in 2022: What to Expect?