Last week, a group of Paraguayan MPs introduced a “Bitcoin bill” in the National Congress, but it turned out to be rather different from what crypto enthusiasts had hoped for. The measure aims to regulate and manage cryptocurrency transactions as well as impose taxes. The proposal makes no mention of designating bitcoin or other cryptocurrencies to be legal money.
In Paraguay, the “Bitcoin Bill” was presented.
Two politicians in Paraguay finally presented the long-awaited “Bitcoin bill” to the National Congress last week, but it was not what some had hoped for. Unlike El Salvador, which declared bitcoin legal cash last month, the initiative offered by representative Carlos Rejala and liberal senator Fernando Silva Facetti does not aim to make it legal tender. In fact, it expresses the polar opposite. According to an early draft:
“Digital assets are not legal tender currencies utilized by the Paraguayan government, and as a result, they are not backed by the Paraguayan Central Bank.”
Instead, the proposed legislation aims to regulate cryptocurrency transactions in order for the state to collect taxes on trading and other uses. The bill recommends that the Central Bank of Paraguay be appointed as the comptroller of all cryptocurrency-related enterprises. When asked about the proposed law’s direction, Facetti stated:
This is a commodity, not legal currency, and the law’s aim is to govern and oversee the industry. That is the project that we are working on right now.
Mining and trading are also governed.
The proposed legislation instead intends to regulate bitcoin transactions so that the state can collect taxes on trading and other uses. All cryptocurrency-related businesses should be audited by the Central Bank of Paraguay, according to the bill. Facetti responded to a question concerning the proposed law’s direction by saying:
This is a commodity, not legal tender, and the goal of the law is to regulate and supervise the industry. That is the project we are now working on.
Mining and trading are regulated as well.
Bitcoin mining and trading are also mentioned in the statute as activities that fall under its purview. If the project is approved, mining-related imports will be taxed at a rate of 5%, equivalent to an accumulated value tax. Additionally, bitcoin dealers will be required to get annual licenses, which will be kept on file by yet-to-be-created governmental organizations. According to the project’s description:
“Any person whose primary business activity is trading must have a license issued by a competent body that allows him to conduct consultations or transactions via a mandate or administration contract.
The legislation mentions penalties if these mandates aren’t followed, but it doesn’t clarify what those penalties would be. The law, if passed, would provide miners a period of time to register with the government and obtain operational permits. Finally, the bill calls for the establishment of the Digital Securities Fluctuation Reserve Fund, which would help traders who lose digital assets in the market.