Paraguay cracks down on budding crypto industry

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Paraguay wants to regulate its nascent crypto industry, and it has already started taking the first steps. The country’s anti-money laundering agency head conducted a nationwide survey involving all crypto service providers last week. They were required to self-report and show all their books to the government for the first time, a new report has revealed.

Paraguay’s crypto industry is growing. The government has recognized this and in its latest exercise, it sought to bring the industry under its watch for the first time. The Secretary for Preventing Money and Property Laundering (SEPRELAD) directed all crypto service providers to open their books to the government last week, according to CoinDesk.

With the exercise, the government aims to understand its crypto industry and be in a better position to formulate and enforce regulations. Christian Villanueva, the head of SEPRELAD explained, “Data obtained will be used to measure the degree of adoption, complexity and size of the virtual asset market in Paraguay, with the purpose of drafting a regulation that adequately regulates them and mitigates the risk of misuse.”

The exercise follows new regulatory guidelines by the Financial Action Task Force on crypto regulations for its member countries. Under the new guidelines, the members are required to include virtual assets in their anti-money laundering purview. This is the first step towards compliance with the new guidelines for the South American country.

While the exercise will benefit the government and lead to the formulation of enabling regulation, it benefits the crypto industry just as much. As with many other countries where crypto isn’t regulated, the crypto industry in Paraguay has faced a lot of difficulty with its banking needs. Stan Canova, an industry veteran in the country told CoinDesk that banks have discriminated the crypto industry for years now, blaming it on the lack of regulations.

He commented, “The banks said [to crypto service providers], ‘hey, you’re not being controlled by SEPRELAD. You’re not under the umbrella of the law. So you’re a risk’.”

With the regulations, which are expected to be in place by the first half of 2020, the banks will now comfortably relate with the crypto industry, Canova said.