Paraguay has plenty of energy to have cryptocurrency miners. Photo: OpenClipart-Vectors / 27387
The Senate of Paraguay approved, last Thursday (16), a bill that regulates the mining and sale of cryptocurrencies. The Chamber of Deputies is going to discuss the matter in 2022. With that, it could consolidate itself as a mining center in the region, an activity that already exists in the country, including with businessmen from Brazil. The project focuses on mining.
Paraguay uses only a third of the energy it produces due to the capacity of the Itaipu plant. This means that the price of electricity is low. And for that reason, Brazilian miners like CoinPy, from Rocelo Lopes, have installed themselves on the other side of the border, as this activity requires a lot of electricity.
The project seeks to give the government greater control over this activity and, thus, also make it easier to collect taxes and combat fraud, the project indicates. However, it does not seek to legalize cryptoactives as a means of payment or legal tender. It is, according to the senators, a way of providing security and transparency about mining for producers and the government.
There were 29 votes in favour, 8 against, 6 abstentions and 2 absentees. And government institutions, such as the Central Bank (BC), presentation critical. This one, for example, sent a comment saying that it does not “follow the project because it involves high investment risk and tax evasion”. The BC and other institutions such as the Ministry of Energy and the National Securities Commission asked for more studies on the subject. And that should happen next year.
Senators say mining in Paraguay will generate taxes
The senators made modifications to the original proposal. Including the one that states that the Po energy use for mining in Paraguay must be by a prepaid system. There were questions about the fact of not charging more taxes from mining companies due to the high use of energy. The justification is that energy is currently being lost, therefore, the country does not gain anything from it. But, you will win.
“This new legislation seeks to recognize digital asset mining as a sector, creates the conditions to guarantee access to energy and requirements to guarantee the formalization of an expanding sector”, said senator Fernando Silva Facetti.
According to what was approved, the regulatory bodies for the mining farms will be the Ministry of Industry and Commerce (MIC), which will register the companies. The group also includes the National Electricity Administration (Ande), the National Secretariat for the Prevention of Laundering of Goods and Assets (Seprelad) and the BC.
In the bill, Facetti and senators Anton¡o Apuril Santiviago and Juan RamĂrez Btizuela claim that the country will be able to collect high amounts in taxes from mining companies.
Low financial inclusion makes crypto transaction cash
“It is important that companies can register these products in their accounts so that they can count on their real appreciation”, says the bill. In addition, “it helps to optimize the tax collection of this sector and allows tracking of production in the country, facilitating the monitoring of supervisory authorities. If these assets are exporters, this bill grants visibility to each movement of the activity and volume exhorted”, says the document.
Apart from mining, what is happening in Paraguay is that the sale of digital assets takes place with paper money due to the lack of access to banks or fintechs. Therefore, this creates informality and ease for money laundering and other illicit activities with cryptos, such as drug and arms trafficking. “Since the National Development Bank is the state’s financial institution, it must make efforts to offer these companies basic services.”
In Brazil, there are several bills ongoing in Congress.