The President of Paraguay – Mario Abdo Benítez – vetoed a bill that could have regulated cryptocurrency mining and turned it into an industrial activity. The reason appears to be the high electricity consumption.
Over the past several months, Paraguay made some significant steps toward the digital asset universe. Some reports suggested that the South American country might follow El Salvador’s example and make bitcoin legal tender. At the end of 2021, the Senate approved a bill that could have regulated and promoted cryptocurrency trading and mining activities.
Paraguay’s President gave his “total veto” on a bill that could have regulated cryptocurrency mining, as well as allowing the “commercialization, intermediation, exchange, transfer, custody and administration” of digital asset activities.
He argued that crypto mining operates in a gray area, and it also uses a considerable amount of energy, which could harm Paraguay’s national electricity network:
“The Presidency opposed the regulation of a sector that asks to be controlled and destroys the possibility of the arrival of new investors and the formalization of hundreds of small and medium-sized companies that live in and depend on this industry.”
However, Benítez noted that the niche generates resources and creates job opportunities for numerous individuals.
It is worth noting that the Paraguayan Senate greenlighted the bill in July as it also sought to apply a 15% tax rate to crypto miners. Nonetheless, the final word was left to the President.
Last summer, Paraguay’s Deputy of the Nation – Carlos Antonio Rejala Helman – said the government will focus its efforts on an “important project” that included Bitcoin and PayPal. According to rumors, the nation’s goal was to make the primary cryptocurrency an official payment method inside its borders (similar to what El Salvador did).
However, the country abandoned those intentions. One of those who was opposing the move was the prominent economist and critic of the crypto industry – Steve Hanke. Last year, he claimed that the debates which came as a result of El Salvador’s move made Paraguay’s authorities think twice and reverse their choice:
“It looks like the backlash to El Salvador’s Bitcoin legal tender (actually, FORCED tender) law has scared some sense into Paraguayan Congressman Carlitos Rajala. He now admits that he’s not trying to make bitcoin legal tender. Good idea.”
