- Mario Abdo Benítez, president of Paraguay, backed down the crypto project promoted by which it had already been approved by the senators and deputies.
- The Paraguayan president declared that crypto mining was a risk given the large amount of energy that this industry requires.
- Paraguayan legislators considered crypto mining as “a fundamental aspect of the economy” and as “a source of work to reduce unemployment in the country.”
The growing popularity of cryptocurrencies forced countries around the world to think about regulations. Some have already made decisions, while others are still working on it. Paraguay was on the right track, but the president, Mario Abdo Benítez, backed down on the crypto project.
The South American country, from its legislators, sought to become a crypto capital, however, the national authority lowered any intention of digital progress and everything projected came to nothing. At least for the moment.
Paraguay, regulation and crypto mining
The Chambers of Deputies and Senators approved in several instances, after some changes, what was informally called the “Bitcoin Law”. This established “obligations, rights and guarantees to investors, consumers and the State”, but also focused on crypto mining, which would be regulated by the National Electricity Administration (ANDE).
Paraguay is one of the countries with the cheapest electricity in the world from the generation of energy from its hydroelectric plants, with a rate close to $5 cents per kilowatt-hour, and although the miners would have to pay an additional 15%, as long as they disclosed their activity, it was still a good deal and there were plenty of takers. The objective was to regulate everything that had to do with the cryptographic scene, including the delivery of licenses and concessions.
Paraguayan legislators considered crypto mining as “a fundamental aspect of the economy” and as “a source of work to reduce unemployment in the country”as published Bitcoinist.
“The objective of this law is to control the activities of production and commercialization of virtual or cryptoactive assets in order to provide legal, financial and fiscal security to the companies that benefit from their production and commercialization.“, assured the authorities.
Why did the president veto the project?
For the law to go from being a project to a reality, the only thing missing was the president’s signature after the legislative representatives approved it with a majority, however, to the surprise of many, Abdo Benítez did not sign.
His explanation left doubts:
“The fixed mining of virtual assets requires the use of intense and enormous electrical energy, as well as a large energy production capacity, which the country possesses.”
Is energy consumption a sufficient reason to cancel a project that was presented in July 2020 and was studied for more than two years? This creates greater uncertainty. For this reason, Senator Fernando Silva Facetti, one of the promoters, showed his anger.
“The executive does not recognize mining as a business that provides resources and employment opportunities, but instead works in a murky area without access to the financial system or the regulations that protect the investor, the consumer and the State,” he stressed.
South America is a great field for cryptocurrencies
With inflation higher than in other parts of the world, South America as a whole suffers from badly hit economies. Paraguay’s announcement not only hits the country, but also collapses the intentions of other nearby territories.
Argentina, Brazil, Colombia and Venezuela are four leading countries in terms of adoption according to research conducted by chain analysis in 2021. Although none of them have a clear regulation in this regard, citizens have found a refuge from their weak currencies.
From social networks they aim to try to change the presidential ruling, although that seems difficult. The digitization that was expected for Paraguay will have to continue waiting.