Paraguay’s Passes Bill To Regulate Crypto, Targets Mining Companies

The Senate of Paraguay has passed a bill on Thursday that aims to regulate cryptocurrency mining and trading in the country.

Bill Seeks To Regulate Crypto Trading

On Thursday, the Senate of Paraguay enacted a law aimed at regulating Bitcoin and cryptocurrency trading and mining in the country. Senator Fernando Silva Facetti, the bill co-author, said on Twitter that the bill will now be debated in Paraguay’s Chamber of Deputies in 2022.

In Paraguay, the bill does not make bitcoin legal tender. During a conversation with Paraguayan Congressman Carlitos Rejala in July, an exclusive peek at the draft bill was released. The bill hinted at stronger regulatory oversights from the country’s regulators when it came to bitcoin mining, as well as an overarching purpose of providing investor safeguards from enterprises that offer bitcoin services.

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Rejala said at the time,

“With this we want to welcome the innovation of cryptocurrencies in Paraguay to the world. This is the result of a very strong and arduous teamwork of many experts in the field, both local and foreign.”

According to the bill, the Industry and Commerce Secretariat will be in charge of overseeing crypto mining in the country, with the support of the Anti-Money Laundering Office and the National Securities Commission. Meanwhile, the National Electricity Administration will be involved in the activity’s regulation.

Meanwhile, despite not explicitly stating the concept of an exchange, the bill plainly suggests some form of record-keeping for any individual or established business entity interested in providing crypto trading or custody services to others.

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Related article | South American Countries Are Interested In Adopting Bitcoin: Who Will Be Next?

Paraguay Targets Crypto Miners

The bill recognized that Paraguay consumes barely one-third of the energy it produces is also included in the bill. Crypto mining activities, if controlled, would almost certainly compensate for the thousands of megawatts of electricity that Paraguay currently does not utilize.

In summary, the law aims to take advantage of the Latin American country’s surplus energy, and it will be debated by the Chamber of Deputies in 2022, as previously stated.

Bitcoin miners might benefit from “thousands of megawatts that Paraguay currently has as surplus,” according to the bill, assuming it falls under the country’s restrictions. The industry would be controlled jointly by the Ministry of Industry and Commerce, the National Securities Commission, the Anti-Money Laundering Office, and the National Electricity Administration in Paraguay, according to the legislation.

The cost of electricity in Paraguay, which is the lowest in the region at roughly $0.05 per kilowatt-hour, is one of the key attractions for mining companies, according to congressman Rejala, who added that nearly 100 percent of energy output originates from hydroelectric sources.

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Paraguayan Congressman Would Make Bitcoin Legal Tender If Elected President

Carlitos Rejala, who co-authored a Bitcoin bill in July, said if he wins presidency he will turn bitcoin into an official currency in Paraguay.

Yesterday, Paraguayan Congressman Carlitos Rejala shared on Twitter his plans to run for the presidency in 2023 and establish bitcoin as an official currency for his country if he wins. Rejala also co-authored a bill proposal with Senator Silva Facetti in July that sought to regulate Bitcoin in Paraguay, though that bill classified BTC as property instead of legal tender.

The progressive member of Paraguay’s Chamber of Deputies told Bitcoin Magazine in July that the goal of adopting Bitcoin is to “welcome the innovation of cryptocurrencies in Paraguay to the world.” However, the proposed bill sought to ensure tight control over bitcoin mining to the Paraguayan government and attempt to offer investor protection from bitcoin businesses in the form of intense regulation.

Since El Salvador enacted its Bitcoin law on September 7, many rumors have surfaced that other countries would follow suit in the coming months. Ukraine recently took steps in that direction by legalizing Bitcoin, although the new legislation did not make the currency a legal tender in the country. Paraguay is now the latest on the list, and its natural characteristics make it a perfect home for the bitcoin mining industry.

Rejala’s country employs nearly 100% renewable energy sources from hydroelectric dams, the most iconic of which, Itaipu, is the second-largest in the world and produces around 14 gigawatts (GW) of power. That much green energy could certainly be leveraged by bitcoin miners but provided they abide by Paraguay’s rules. Rejala and Facetti declared in their bill that those wishing to set up shop in the country would need to request and receive a bitcoin mining license granted by the Ministry of Industry and Trade (MIC).

It is unclear if Rejala’s tweet indicates an actual intent to run for the presidency in his country. The congressman appears to be a Bitcoin bull; however, the intense scrutiny proposed by his bill poses some questions as to whether his country would be able to fully embrace Bitcoin.


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Sticking To The Regulated Path For Bitcoin In Paraguay

A few weeks ago, Paraguayan Congressman Carlitos Rejala sent us a translated version of legislation seeking to clarify the legal status of bitcoin and other cryptocurrencies in his country. Coming shortly after lawmakers in El Salvador — located just 3,000 miles away — had established bitcoin as legal tender, many in the space were optimistic that this legislation would attempt to grant BTC similar status in Paraguay.

That was not the case. While El Salvador’s final bill was just a few pages of text representing easily the most favorable, accommodating Bitcoin legalese ever passed, the early draft of Paraguay’s legislation set a different tone. It seeks to establish bitcoin as property, rather than legal tender; it would require bitcoin miners to obtain government licenses for their operations, an apparent restriction on the free use of power to create permissionless value; and it detailed sanctions and penalties for those who would violate its proposed rules, which included measures to protect cryptocurrency investors as well.

But two of the architects behind the proposed legislation argue that for their country, this bill and its detailed regulatory framework are necessary to foster Bitcoin innovation. While a lack of any federal rules may be the cypherpunk vision for many Bitcoiners, they feel that without them, the Bitcoin industry cannot flourish in their home country.

Is Regulation The Best Way To Foster Bitcoin In Paraguay?

“Bitcoin as a legal tender, it’s not going to happen right now in Paraguay,” explained Juanjo Benitez Rickmann, the managing director of a Paraguayan cryptocurrency mining firm who also serves on government fintech councils. “We are a really stable country, a really stable economy, we have a three or 4% inflation rate, we have a strong currency that is the guaraní, so we are just fine. We thought that we have the time to make a really good proposal for everyone.”

An agricultural investor in the country recently reported that Paraguay’s economy has grown by more than 4% each year since the early 2000s, with its middle class seeing expansion in this time as well. Since then, foreign investment in the country has also grown. It’s likely that this economic status means that the government there, as in most places around the world, doesn’t feel the need to capitulate to Plan B, as El Salvador’s might. But Rickmann does feel like changes are necessary if this foreign investment is going to expand to Bitcoin businesses, particularly miners.

“All the bill is about is to create a healthy environment for an investor who wants to come to Paraguay and do bitcoin mining,” he said. “Why we’re focusing on Bitcoin mining is because we know that anybody can build a data center here in Paraguay… [But for] somebody to want to come to Paraguay to invest, not $1 million, maybe $30 million … they need to be really secure and comfortable with a law, a framework, that will help them to work with peace of mind.”

The draft bill was signed into Paraguay’s senate on July 15, and an oversight committee is now prepared to start “socializing” it with additional members of government, said Fernando Arriola Arza, a Paraguayan cryptocurrency miner and government liaison who, along with Rickmann, said that he “wrote about 90%” of the bill. Next steps would be for the relevant government ministries to meet with the bill’s authors and share their thoughts, likely in the next ten days or so.

Will This Regulation Help Paraguay Capture Its Bitcoin Mining Opportunity?

“There’s also a geopolitical factor to the presentation of this bill,” Arza added, pointing to two hydroelectric dams that Paraguay operates with its neighbors Brazil and Argentina. “Those massive hydroelectric dams generate about… 5.5 gigawatts of excedent energy that we can be consuming. That energy goes to waste pretty much. A portion of that is being sold to Brazil at near zero. And the other portion of it is sold to our other financial partner, which is Argentina, which has yet to pay us for the past five years. So, there’s an overall optimization of usage of power that is needed here and mining is a great opportunity for the country to consume that energy.”

But to capture that opportunity, Arza said, billions of dollars in investment would be needed. Like Rickmann, he thinks attracting foreign-based bitcoin mining companies is critical.

“We thought it would be prudent to establish a clear framework for international investors, specifically investors coming out of countries that have been banning this,” he explained, alluding to bitcoin miners based in China who are now seeking new homes.

A pivotal aspect of this framework is that it would “recognize mining virtual assets as industrial activities within the Ministry of Industry and Commerce,” per a translated version of a draft of the bill. That is key for navigating Paraguay’s legislative structure in Arza’s view.

“This is meant to be an industrial bill… We don’t want cryptocurrency mining to be considered a financial service,” he said. “If we go into regulation for our field of industry, with the Ministry of Industry, the central bank is not involved and the financial authorities are not involved. And this is our main concern because in Paraguay, when financial authorities are involved, they’re going to put this bill in a nice, little, neat folder and put it somewhere where we’re not going to see it for five years.”

Control Versus Freedom

While this regulatory framework expands far beyond the bitcoin mining industry, that is clearly the focus for Rickmann and Arza. And the bill’s proposed requirement for mining licenses did appear to be one of its most onerous, heavy-handed provisions. Similar rules in Iran, for instance, seemingly disincentivized a decentralized bitcoin mining industry, rather than encourage it.

And it should also be noted that as entrenched cryptocurrency miners themselves, Rickmann and Arza would likely stand to benefit from a government mining license requirement. But when pressed over the fact that many in the Bitcoin community see regulation as antithetical to the technology and movement, they argued that a libertarian approach would be untenable in their country.

“In Paraguay, things move differently,” Arza said. “The things that we’ve requested in the license are the things that the government requires from you either way to start any single kind of operation.”

Arza also pointed to a significant criminal presence in Paraguay — which he noted is the second-largest producer of cannabis in Latin America, despite that being an illegal substance there — as a reason that laws are needed if Bitcoin will find legitimate footing.

“If we don’t have a legal framework that protects us business owners and international investors from this kind of hate and crime, then we will never have an actual civilized endeavor here,” he said. “We’re never going to grow.”

Still, the pair seemed to have a sense that their proposed bill and regulation in general are unpopular with the international Bitcoin community, and they were eager to clarify its purpose. Rickmann acknowledged that some changes may be necessary to better serve Bitcoin adoption.

“And we are thinking… we have to add in the proposal that if you are spending, for example, 50 kilowatts in your home or in your office, you don’t need to get a license for that,” he said.

To date, Bitcoin has seen remarkable growth around the world among a lack of regulation. While favorable rules like El Salvador’s are celebrated, regulation around a permissionless, censorship-resistance, distributed monetary network are largely meaningless and impossible to enforce. But they do provide at least one tangible measure, demonstrating a government’s prevailing attitude toward this financial revolution.

With this draft legislation, Paraguay appears to be a place where regulators recognize the immense commercial potential of Bitcoin. But whether or not that potential can be fostered in the way that they hope is yet to be seen.


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Paraguayan Congressmen Propose New Bitcoin Bill

Paraguayan lawmaker Carlitos Rejala has drafted and ready to propose the new bitcoin bill to congress, according to TheStreet Crypto report.

After the leakage of the Bitcoin bill draft disclosed to the public Tuesday, Paraguayan congressmen Carlitos Rejala and his companion’s politicians have created the bill and ready to propose to the congress for regulating Bitcoin and cryptocurrencies in this South-American country, according to local media TheStreet Crypto report Wednesday.

According to the report, the objective of the new bill is to “regulate the activities of production and commercialisation of cryptocurrencies”.

Actors who intend to conduct crypto mining are requested to get virtual assets mining licenses; these mining operations will also be approved and overseen by the authority. The legislation will categorise the mining activities as “innovative and elector-intensive industry”.

Rejala welcomed the proposal on Twitter, saying the proposal will allow Paraguaya to get an advantage from this virtual currency, describing it as a competitive industry and plans to lead in sustainable Bitcoin mining by “safeguarding and optimising renewable energy”.

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Yet, the market tends to remain cautious and polarized about the new bill. “It is important to see if the actual bill turns out to be ‘crypto-friendly’ because in some cases governments have promised to regulate crypto, but the actual legislation was underdeveloped and put excessive scrutiny on companies and individuals,” Kirill Suslov, CEO of trading app TabTrader said.

On the other hand, “Being regulated (the bill) should take away the risk for investors, which makes it easier to attract capital,” said Ruud Feltkamp, CEO of crypto trading bot Cryptohopper.

The market also concerns about the issue of the circulation of Bitcoin. About 90% of Bitcoins in existence haven’t been converted to fiat currency in over a year, according to JPMorgan’s report, which was cited first by Bloomberg. Most of the Bitcoin that people own could be being held in virtual crypto wallets, which means a large part is not being converted to fiat currencies and being locked up in illiquid entities.


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Inside Paraguay’s Proposed Bitcoin Bill

A proposed bill for regulating Bitcoin in Paraguay would require mining licenses and establish investor protections.

In a WhatsApp conversation I had with Paraguayan Congressman Carlitos Rejala, he shared the draft of a bill meant to regulate Bitcoin in Paraguay.

“With this we want to welcome the innovation of cryptocurrencies in Paraguay to the world,” Rejala said over WhatsApp. “This is the result of a very strong and arduous teamwork of many experts in the field, both local and foreign.”

A translated version of the bill proposal refers to bitcoin and other cryptocurrencies as “virtual assets,” “cryptoactive,” and “cryptocurrency.”

This bill was eight pages long, filled with 22 articles, which was worked on in conjunction with Senator Silva Facetti. This bill is much longer than the bill El Salvador voted into law recently, recognizing bitcoin as legal tender, which didn’t include as many individual regulations.

This proposed bill suggests Paraguay’s legislators are seeking tight control over Bitcoin mining in the country, attempting to offer investor protection from bitcoin businesses and specifically indicating that bitcoin is not recognized as legal tender in the country.

The Bill Wants To Require Bitcoin Mining Licenses

As mentioned in “Article 5,” a proposed virtual asset mining license, granted by the Powers of The Ministry of Industry And Trade (MIC), would be required for any entity mining bitcoin. “Article 10” goes into more detail, stating that those who want to mine bitcoin must “request the authorization of industrial electricity consumption.” Then after that has been obtained, they can then “request the authorization license for the industrial exploitation” for bitcoin mining.

The proposed bill would require bitcoin miners to acquire a license to operate.

The proposed bill would require bitcoin miners to acquire a license to operate.

The Bill Wants To Protect Bitcoin Investors

“Article 11” states that those providing the sales of bitcoin are prohibited from “selling, assigning or transferring their property, giving as a loan or guarantee, or affecting the use and enjoyment of the Virtual Assets that they manage or guard for third parties without the express authorization of the owner.”

This would seemingly protect bitcoin investors whose private keys are in the possession of a business like an exchange or bank from having their bitcoin fractionally reserved or otherwise used without their consent.

The Bill Would Recognize Bitcoin As Property, Not Legal Tender

“Article 3” of the bill defines bitcoin as property, as it is defined in many other countries, reassuring that it can officially be bought, sold and licensed. And “Article 14” clarified that bitcoin would not be recognized as legal tender, stating that: “The Virtual Assets trading entities must inform the acquirer of the trading conditions with Virtual Assets, expressly notifying that the virtual assets are not recognized as legal tender, therefore, they are not backed by the Central Bank of Paraguay.”


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Paraguay’s Proposed Crypto Legislation May Be Counterproductive

Paraguayan lawmakers are set to submit a bill aimed at regulating the country’s cryptospace and make it mandatory for bitcoin (BTC) linked businesses to register with the Undersecretariat of State Taxation, according to reports on July 14, 2021.

Carlos Rejala’s Crypto Regulation Push 

Paraguayan Congressman Carlos Rejala has joined forces with Senator Silva Facetti to formulate a crypto regulation bill. Sources close to the latest development have revealed that the bill aims to make it mandatory for crypto-related businesses to register with the Finance Ministry’s Undersecretariat of State Taxation.

The bill also aims to regulate bitcoin mining operations, crypto exchanges as well as peer-to-peer (P2P) crypto trading platforms, making it compulsory for market participants to register as “obligated subjects.”

“It’s important that companies can register these products within their accounting so that they can have their real valuation, additionally [it] helps to optimize the tax collection of this industry, finally giving traceability of what is produced in the country facilitating its tracking by supervisory authorities,” the document reads.

Good Intentions, Wrong Approach

While a section of the draft law states that its major objective is to foster regulatory clarity and legal certainty in Paraguay’s crypto industry, the bill has attracted serious criticisms from Paraguayan crypto advocates and observers.

One of the several talking points against the proposed legislation is its lack of inclusivity. Paraguayans have argued that the lawmakers have failed to carry crypto industry stakeholders along, as they did not seek feedback from key players in the country’s cryptospace.

In the same vein, other observers have argued that despite the fact Rejala and his colleagues have a genuine motive to put in place amenable regulations for Paraguay’s crypto ecosystem, their efforts may end up being counterproductive, as the bill doesn’t encourage innovation in any way or create economic development opportunities. Instead, it creates obstacles for market participants.

Though it’s still not clear whether the bill will get approved, crypto taxation is still a controversial topic in the industry. At a time when forward-thinking nations like El Salvador and others are creating tax-free havens for innovative businesses, Rejala’s bill may indeed be counterproductive, especially if the government decides to impose exorbitant taxes on crypto businesses.

Elsewhere, crypto advocacy group Project Mano has urged Ethiopia to put its abundant renewable energy resources to good use by engaging in extensive bitcoin mining operations which would significantly boost the country’s GDP and reduce its dependency on the fiat USD.

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Paraguay To Introduce Bitcoin law, Draft Leaks details

Paraguay is expected to be another country worldwide to propose Bitcoin law after El Salvador, Bitcoin as Fiat Money.

The incoming bill is expected to introduce on Wednesday local time, which would request registration of cryptocurrencies under the Under-secretariat of State of Taxation (SET), according to Decrypt, a report Tuesday, citing a leaked draft copy in Spanish.

“The objective of this draft law is to establish legal certainty, financial and fiscal in the business derived from the production and commercialisation virtual assets”.

On the other hand, the bill would also regulate trading and crypto mining through exchanges and peer-to-peer marketplaces where require users to register as obligated subjects, based on Decrypt’s reporting. Therefore, “virtual asset mining should be recognised as an industrial activity within the Ministry of Industry and Commerce since it uses capital, labour, machinery and construction of civil infrastructure for produce a product,” according to the draft.

Legislator Carols Rejala and Senator Fernando Silva Facetti, two congressmen who belong to separate and different parties are considered the founding members to facilitate Bitcoin in the country jointly. Rejala has expressed his ambition on Twitter to push an important project, referring to the campaign of launching Bitcoin law.

Bitcoin nation?

Paraguayan is very likely to become the first country in South America and the second country worldwide to adopt Bitcoin as legal tender after El Salvador if the Paraguayan congress successfully passes the Bitcoin law.

El Salvador has approved and announced to adopt Bitcoin as legal tender, effective from September 7, as the Latin American country, passed the Bitcoin law since June. Yet, more than three-quarters of Salvadorans are remaining cautious and sceptical towards adopting this emerging fiat money.

Voices concern if Paraguay could successfully facilitate Bitcoin to reform its monetary policy. 

Bitcoin was trading $31.923.4, down by 4.0% during the intraday, bounced by the low at the $31,711.06 level.  

Image source: Shutterstock


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Lawmaker in Paraguay Teases ‘Mega Surprise’ in Bitcoin Bill Presentation Next Week

A member of Paraguay’s lower house is promising a “mega surprise” ahead of his presentation on a Bitcoin-focused bill to lawmakers next week.

Carlitos Rejala tells his 59,000 Twitter followers that they can expect a major Bitcoin announcement for Paraguay and the rest of the world in the coming days.



“I am here to unite Paraguay. That is why we decided with Senator [Fernando Silva Facetti] to present together the bill [Bitcoin] on Wednesday, July 14! Stay tuned since there will be a mega surprise for Paraguay and the world. Something GIANT is coming.”

Rejala has teamed up with Paraguay Senator Fernando Silva Facetti to present a bill that will, in his words, make the country “a hub for the crypto investors of the world and subsequently to be placed among the ones on the cutting edge of digital technology.”

Although details of the bill are still unknown, Senator Facetti unveiled hints of the bill’s goals in a Twitter thread, stating that Paraguay must begin to adapt to the world of digital investments.

“We are putting together a Bill that has a real impact, is adapted to the national reality, integrates the needs of supervision and control, guarantees investment and protects the rights of consumers. Something healthy, sane and manageable… 

Paraguay must adapt to the new digital world, empower itself as a focal point of energy transformation for digital investments.”

Rejala turned heads last month when he added laser eyes on his Twitter profile photo, a common signal of Bitcoin bullishness on social media. At that time, Rejala said that he was working on something big, and hinted that PayPal would be involved in some form.

“As I was saying a long time ago, our country needs to advance hand in hand with the new generation. The moment has come, our moment. This week, we start with an important project to innovate Paraguay in front of the world! The real one to the moon! BTC, PayPal.”

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Paraguayan Lawmaker to Introduce Bitcoin Legislation Bill Next Week

After El Salvador, Paraguay could be the next nation to adopt the bitcoin standard.

Bitcoin Regulation Legislation to Be Introduced

In a tweet shared today, Paraguayan lawmaker Carlitos Rejala said he was working with Senator Fernando Silva Facetti to introduce legislation focused on bitcoin (BTC) regulation in the country.

Notably, Rejala is expected to introduce the legislation on July 14.

If Rejala’s past tweets are anything to go by, it would seem the lawmaker is committed to make Paraguay the next country after El Salvador to make bitcoin an integral part of the economy.

While initially there were speculations that Rejala is working toward making BTC a legal tender, the lawmaker later cleared the air saying the legislation is more about regulating bitcoin in an efficient manner.

Speaking to Reuters in June, Rejala said:

“We want the regulators and banks to also participate so that Paraguayans or foreigners can operate with these assets legally, because we know that illegal transactions exist here and in other countries. We want to be a crypto-friendly country.”

Rejala addressed the bitcoin legal tender speculations by saying:

“It is a bill of digital assets and it differs from that of El Salvador because they are taking it as legal currency and in Paraguay it will be impossible to do something like that.”

Is Adopting the Bitcoin Standard the Answer to All Economic Woes?

El Salvador’s move to adopt bitcoin as legal tender took the world by surprise as never before in history has a nation embraced cryptocurrencies to such an extent.

While the motive behind the move might be to ensure financial sovereignty, it remains to be seen whether such initiatives are able to attract enough public support.

That being said, one cannot overlook why financially troubled countries would pivot to bitcoin to reduce their dependence on the greenback.

For instance, consider the example of countries like Argentina and Turkey.

Earlier this year, Google search for bitcoin peaked in Turkey following the brutal fall of the Turkish lira which was preceded by the President’s move to sack the country’s central governor abruptly.

In similar news, BTCManager reported on July 8 that Jose Luis Ramon – a member of the Chamber of Deputies of Argentina – had floated a bill to make bitcoin and other cryptos legal payment options in the country.

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