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Paraguayan lawmakers have been pondering for a year a comprehensive regulatory framework for cryptocurrencies. The new law is expected to come out this year, after President Mario Abdo Benítez ratifies it.
On July 14, the Paraguayan Senate passed a bill establishing a tax and regulatory framework for businesses operating in the field of cryptocurrency mining. This bill was proposed by Senator Fernando Silva Facetti in July 2021 and passed by the National Assembly in May before reaching the Senate. The document aims to call for the establishment of a Ministry of Industry and Trade (MIC) to oversee crypto service providers. The bill is now just one step away from being approved into law by President Mario Abdo Benítez.
Earlier, in May, Congress announced that the bill would include regulations on mining, commercialization, intermediation, exchange, transfer, custody/management of assets or instruments. electronic money.
Companies operating in the cryptocurrency industry will be treated equally as securities trading companies in terms of tax obligations. Both will be exempted from Value Added Tax (VAT) by the Deputy Minister of State for Taxation, which will instead be included in income tax.
The bill also discusses cooperation between cryptocurrency miners and local electricity providers. In addition to the relevant licensing requirements, mining businesses must specifically report their energy consumption to ANDE, Paraguay’s national electricity agency. If miners are found to have committed fraud, ANDE reserves the right to cut off their electricity supply.
The bill stipulates that the government will subsidize energy costs for miners, but they will pay 15% more than other industries.
Senator Facetti said that the amendments were made to the original bill to bring the complete regulations in place today.
However, the cryptocurrency bill also met with objections. Senator Enrique Bacchetta has stated that while he recognizes the new bill will make the country very profitable, he also doubts its ability to create jobs for the people of Paraguay when the bill passes. . Sen. Esperanza Martinez expressed similar concerns, arguing that the rate of energy consumption from miners far outweighs the number of jobs they will create.
The move made Paraguay the latest country in the Latin American region to take a giant leap forward in crypto adoption and regulation. Prior to that, in 2021, El Salvador accepted Bitcoin (BTC) as legal currency, and countries like Brazil, Argentina, and Panama are all planning to develop their own crypto laws.
This is considered a way to both legalize cryptocurrencies and prevent the risks of digital assets.
For the South Africa region, cryptocurrencies will fall under the scope of the Financial Intelligence Act (FICA), anti-money laundering (AML) and countering the financing of terrorism (CTF).
The Indian Ministry of Finance has announced a 1% tax deduction at source (TDS) for all crypto asset transfers above a certain size starting July 1, 2022. In addition, a new regulation on taxation of 30% on cryptocurrencies has been passed into law by the Upper House of the Indian Parliament, effective from April 1, 2022.
The European Union EU will consider passing a law on virtual currencies and Bitcoin is in danger of being banned. However, in the short term, cryptocurrencies still have to comply with the minimum environmental sustainability standards contained in the draft MiCa law.
On March 9, US President Joe Biden signed an executive order requiring government agencies to review the risks and benefits of cryptocurrencies. Accordingly, Mr. Biden has asked the US Treasury Department to make policy recommendations on virtual currencies, and lawmakers must commit to monitoring to respond to the risks that digital assets affect. to traditional financial markets.
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