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

Countries in Latin America are taking cryptocurrencies more seriously and are currently striving to ratify legal and other relevant frameworks.

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

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

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Paraguay Advances Crypto Bill In Majority Vote

In a special session, deputies voted by a margin of 40 to 12 in support of approving the modified law draft.

In spite of the Senate’s initial acceptance of the law in December of last year, the Chamber of Deputies’ recent revisions will need the Senate to reconsider the draft before submitting it for presidential approval.

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

Bill Seeks To Make Paraguay A Crypto Mining Hub

Moreover, the purpose of this measure is to make Paraguay an international hub for miners because of 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 the anti-money-laundering agency of Paraguay.

The bill states, “The goal of this law is to control the production activities and commercialization of virtual or crypto assets in order to provide legal, financial, and fiscal security to the firms that profit from their production and commercialization.”

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

Authorization For Industrial Power Usage

Individual and corporate miners will be required 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 individual or legal business that intends to offer crypto trading or custody services to third parties, however the idea of exchange is not included.

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

In addition, 30% provided crowdfunding services and technologies to financial institutions. Only 8% of the new enterprises utilized cryptocurrency, data by Statista show.

Featured image from VOI, chart from TradingView.com