The President of Paraguay vetoes the crypto regulation law that wanted to classify crypto mining as an economic activity. The President vetoed the bill on Monday and stated that the high power usage of mining may stymie the growth of a viable national industry.
According to the order, crypto mining requires a large amount of money and little personnel and hence does not create added value on par with other industrial activities. Cryptocurrency is one of the world’s greatest employment producers. According to LinkedIn’s Economic Graph, crypto and blockchain job listings in the United States increased by 615% in 2021 compared to 2020.
The President of Paraguay vetoes the crypto regulation law, thus crushing crypto enthusiasts dreams in the country.
According to the bill’s proponent, Senator Fernando Silva Facetti, the law was intended to boost crypto mining by utilizing excess power, however, the Paraguayan government decided to ignore the activity in the country:
1# Hoy recibimos de @PresidenciaPy el VETO TOTAL a Ley “Que regula la minería, comercialización, intermediación, intercambio, transferencia, custodia y administración de #CRIPTOACTIVOS” ignorando existencia de esta actividad que hoy funciona en la sombra normativa. (abro hilo)
— FernandoSilvaFacetti (@FSilvaFacetti) August 30, 2022
On July 14, the Paraguayan Senate accepted the measure, establishing crypto mining as an economic activity. They imposed a 15% tax on its economic activity, although the decree views the rates as an indirect incentive to the industry. It states:
“By subordinating the rate applicable to the users of crypto miners to just a small percentage above the current industrial rate, an indirect industrial incentive would be offered to crypto mining.”
According to the paper, industrial investment in the country surged by 220% in the last year to $319 million USD, while GDP expanded by more than 4% during the same period. If this trend continues, the national industry may require the complete quantity of energy generated and accessible in the country to be viable.
“If Paraguay wants to intensify crypto mining today, in the next four years it will be forced to import electricity”, the decree said.
The Senate-approved law requires miners to apply for a license and obtain authorisation for industrial energy usage. It also established the Ministry of Industry and Commerce as the principal law enforcement body, as well as the Secretariat for the Prevention of Money or Asset Laundering to oversee cryptocurrency investment firms.
Since 2020, low energy costs in Paraguay have prompted local and multinational corporations to build mining infrastructure in the country. According to worldwide petrol price statistics, home electricity costs $0.058 per kWh in December 2021, while commercial electricity costs $0.049 per kWh.
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