After El Salvador and the Central African Republic approved Bitcoin as legal tender, other nations, such as Paraguay, are rushing to catch up and implement regulations for this unique asset class.

Latin American countries are taking cryptocurrencies more seriously and are currently striving to ratify legal and other frameworks.

Due to its low cost of electricity and “crypto-friendly” environment, Paraguay has historically been seen as a haven for cryptocurrency mining operations.

Despite resistance from the country’s central bank, Paraguay’s Chamber of Deputies approved a plan to regulate cryptocurrencies on Thursday.

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Paraguay advances bill on a majority vote criptomonedas

In a special session, the deputies voted by a margin of 40 to 12 in favor of approving the amended bill.

Despite the Senate’s initial acceptance of the law in December last year, recent revisions by the Chamber of Deputies will require the Senate to reconsider the bill before submitting it for presidential approval.

The law, which was initially introduced in the Paraguayan Senate in July last year, aims to govern commercial activity related to digital assets. This involves the licensing and supervision of mining companies operating cryptocurrency within the nation. The proposed legislation does not make any cryptocurrencies legal tender.

Bill seeks to make Paraguay a center of criptominería

In addition, the purpose of this measure is to turn Paraguay into an international hub for miners due to the country’s low electricity rates, which are approximately five cents per kilowatt-hour, the lowest rate in Latin America.

The new legislation requires bitcoin exchanges to register their businesses as virtual asset service providers with Paraguay’s anti-money laundering agency.

The bill establishes: “The objective of this law is to control the activities of production and commercialization of virtual or cryptographic assets to provide legal, financial and fiscal security to the companies that benefit from their production and commercialization.”

Crypto total market cap at $1.18 trillion on the weekend chart | Source: TradingView.com

Authorization for industrial energy use

mining individuals and organizations will have to request authorization for industrial electricity consumption and then apply for a license if the measure becomes law.

The proposed legislation also establishes a registry for any natural or legal person that intends to offer cryptocurrency trading or custody services to third parties, however, the idea of ​​exchange is not included.

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Approximately half of the companies in Paraguay Fintech enabled digital payments and innovative financial services for businesses and consumers in 2020.

Additionally, 30% provided crowdfunding services and technologies to financial institutions. Only 8% of startups used cryptocurrencies, Statista data shows.

Featured image from VOI, chart from TradingView.com