Paraguay’s Upper House of Parliament, the Chamber of Senators, had passed a significant bill to regulate the Latin American country’s burgeoning digital assets and block reward mining industry.
The bill was passed during an ordinary session of the senators on July 14, according to the House’s official website. The regulation will introduce comprehensive guidelines for the mining, commercialization, intermediation, exchange, custody, and administration of digital assets or instruments that allow control over digital assets.
The bill, which was first proposed in 2021 by Senator Fernando Silva Facetti, has undergone several modifications to reach its final state. It was recently modified and passed on to the Senate by the Lower House, the Chamber of Deputies. The deputies included provisions to give the Ministry of Industry and Commerce powers to penalize entities or individuals carrying out unauthorized block reward mining or digital assets services.
Other specifics of the bill include that block reward mining companies will have to present a power consumption plan to the national power administrator and that digital assets firms will be exempt from value-added tax (VAT) but must pay income taxes.
With the green light from the Senate, the bill will now proceed to President Mario Abdo Benítez’s desk for promulgation or vetoing. If passed, its major provision of the bill is that all digital assets-related entities must be licensed by regulators to carry out operations in the country.
While the bill has advanced in the system, not all the country’s lawmakers agree with its passage. Some senators and deputies have pointed out lingering concerns over regulating the digital assets industry.
These range from concerns about the risks that digital assets pose to financial stability to fears of high energy consumption of block reward mining and the strain it could place on Paraguay’s already declining electricity production capacity.
Paraguay not alone in regulating digital assets in Latin America
While looking to protect consumers with the regulations, Paraguay also hopes to make its energy sector which offers cheap power produced from renewable hydroelectric sources, more attractive for the international block reward mining industry.
Paraguay is not the only country in its corner of the world looking to embrace the digital assets industry through regulations. Brazil’s government is also racing towards introducing sweeping regulations for digital assets.
Similarly, Panama’s bill to regulate the industry only hit a roadblock when it was vetoed in part by President Benitez, who cited concerns of inadequate Anti-Money Laundering and Counter-Terrorism Financing provisions, as noted by a Business Insider report.
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