Mario Abdo Benitez rejects crypto regulation law

On Monday, Mario Abdo Benitez, the president of Paraguay, rejected a bill that attempted to classify bitcoin mining as an economic endeavor.
Mario Abdo Benitez rejects crypto regulation law
Mario Abdo Benitez rejects crypto regulation law

According to Mario Abdo Benitez, the development of a national industry that is sustainable may be hampered by mining’s high power use.

As the country’s mining industry continues to grow as a result of cheap energy prices, the law was adopted by the nation’s Senate in July.

According to the regulation, cryptocurrency mining does not provide added value on par with other industrial operations since it requires large amounts of capital and little human labor.

One of the main sources of employment creation worldwide is cryptocurrencies. According to the LinkedIn Economic Graph, the number of crypto and blockchain employment listed in the US increased by 615% in 2021 compared to 2020.

The regulation was intended to encourage crypto mining by making use of excess power, according to the bill’s proponent, Senator Fernando Silva Facetti, however, both Mario Abdo and the Paraguayan government decided to ignore the practice there:

On July 14, the measure was finally passed by the Paraguayan Senate, classifying cryptocurrency mining as an economic activity.

They enacted a 15% tax on the associated economic activity, although the decree views the rates as a tacit encouragement for the sector. It reads:

“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.”

The degree states that although the GDP climbed more than 4% over the previous five years, industrial investment in the nation surged by 220% in the prior year to $319 million USD.

Mario Abdo is of the view that the national industry could need all the energy generated and accessible in the nation if this pace is allowed to continue in order to maintain sustainability.

According to the Senate-approved legislation, miners must submit an application for a license and a request for permission to use industrial energy.

Additionally, it created the Secretariat for the Prevention of Money or Asset Laundering to oversee cryptocurrency investment firms and the Ministry of Industry and Commerce as the major law enforcement agency.

Since 2020, local and multinational businesses have been installing mining infrastructure in Paraguay due to the country’s cheap energy prices.

According to statistics on worldwide gasoline prices, home power expenses in December 2021 were $0.058 per kWh and commercial electricity costs were $0.049 per kWh.