Paraguay President Vetoes Crypto Regulation Law
On Monday, Paraguay’s President Mario Abdo Benítez vetoed a bill to recognize cryptocurrency mining as an industrial activity. He said the high electricity consumption of mining could hamper the expansion of a sustainable national industry.
The decree stated that crypto mining was capital-intensive with low labor usage and therefore would not generate added value on par with other industrial activities. Around the world, cryptocurrency is one of the biggest job creators. LinkedIn’s economic chart shows that the listing of crypto and blockchain jobs grew by 615% in 2021 compared to 2020 in the United States.
According to the bill’s sponsor, Senator Fernando Silva Facetti, the law was intended to promote cryptocurrency mining through the use of excess electricity, but the Paraguayan government chose to ignore the activity in the country. :
1 # Hoy recibimos de @PresidencyPy el VETO TOTAL a Ley “Que regula la minería, comercialización, intermediación, intercambio, transferencia, custodia y administración de #CRIPTOACTIVOS” Ignore the existence of this activity that no longer works in the sombra normativa. (abro hilo)
— FernandoSilvaFacetti (@FSilvaFacetti) August 30, 2022
The Paraguayan Senate finally approved the proposal on July 14, recognizing crypto mining as an industrial activity. They established a 15% tax on its related economic activities, but the decree sees the slices as an indirect incentive to the industry. It says:
“By subordinating the rate applicable to users of crypto-miners to only a small percentage above the current industry rate, an indirect industry incentive would be offered to crypto-mining.”
According to the document, over the past twelve months, industrial investment has increased by 220% in the country to $319 million, while GDP has grown by more than 4% over the past five years. If this rate is maintained, the national industry could need the total amount of energy produced and available in the country to remain sustainable.
“If Paraguay wants to intensify crypto mining today, in the next four years, it will be forced to import electricity,” the decree says.
The bill approved by the Senate states that miners should apply for a license and seek permission for industrial energy consumption. It also established the Ministry of Industry and Commerce as the main law enforcement authority and the Secretariat for the Prevention of Money or Asset Laundering to oversee crypto investment companies.
Low energy costs in Paraguay have prompted local and foreign companies to install mining infrastructure in the country since 2020. As of December 2021, household electricity costs were $0.058 per kWh and business electricity costs were of $0.049 per kWh, according to world oil price reports.
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