Paraguay’s president Mario Abdo Benitez has vetoed a highly anticipated bill that would regulate the cryptocurrency mining sector and other commercial activities related to virtual assets. The bill was rejected because the energy costs outweigh any employment benefits.
On Monday, August 29, the president of Paraguay vetoed a bill that would have regulated the virtual asset market, including the commercialization of cryptocurrency mining in the country. The primary reason behind the president’s decision for vetoing the bill was that crypto mining uses high amounts of energy and brings relatively little employment benefits. According to the official Twitter account of the president:
The Executive Branch objects to the bill that seeks to regulate crypto mining in the country.
The presidential decree reads:
Fixed mining of virtual assets requires the use of intensive and massive electrical energy and great capacity of energy production, which the country has. Nevertheless, it does not generate a lot of labor like any other sector industry.
According to the proposed bill, cryptocurrency miners would have to pay higher electricity rates. A clause in the decree described as an “indirect incentive” would have capped rates at 15% above the current industrial tariff. Fernando Silva Facetti, one of the senators that introduced the bill in 2021, has strongly objected to the president’s decision in a statement. According to Silva, the president’s veto “ignores the existence of this activity that today functions in the regulatory shadows.” The senator added that the crypto mining sector operates in a legal gray area and cannot access the country’s financial system, yet generates jobs and resources.
The bill, submitted to the president, focused on:
Regulating the activities of mining, commercialization, intermediation, exchange, transfer, custody and administration of crypto assets or instruments that allow control over crypto assets, in order to guarantee legal, financial and fiscal security to the businesses derived from its generation and commercialization.
The bill will now go back to both chambers of the country’s legislature, where lawmakers can reconsider the proposal or accept the veto. Earlier this month, Felix Sosa, president of Paraguay’s National Electricity Administration (ANDE) told a local news station that he would ask the president for a partial veto of the bill. He questioned whether the 15% cap would be sufficient to cover the cost of the energy consumption, saying that “illegal connections” in the country’s crypto mining industry had been causing economic losses. To solve this issue, Sosa said that ANDE is looking to have crypto mining firms pay for their electricity in advance with U.S. dollars.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.