Key facts:
- The Fintech Chamber and the miners’ union participated in the drafting of the bill.
- The regulations establish obligations, rights and guarantees in the cryptocurrency industry.
The Paraguayan Senate, as CriptoNoticias reported last night, approved a bill that regulates different activities related to bitcoin (BTC), including cryptocurrency mining.
The legislation is now awaiting the verdict of the Executive Power , so that later —if approved— it will be implemented throughout the Paraguayan territory.
It is a regulation that establishes obligations, rights and guarantees for investors, consumers and the State. In addition, it makes clear the functions of various regulatory entities, including the National Electricity Administration (ANDE).
To find out first-hand what industry players in Paraguay think about the bill, we spoke with four people who work in mining in that country . They are Juanjo Benítez Rickmann, CEO of Digital Assets; Luis Pomata, CEO of Nano Mining; Fernando Arriola, shareholder and vice president of BCMining Paraguay; and Fernando Grijalba, Braiins business developer. The first three are members of the Paraguayan Fintech Chamber and were involved in the bill.
“This law is necessary so that we can continue to grow”
Benítez Rickmann is convinced that the bill will be approved by the Paraguayan Executive Branch . He bases that hope on “the multiple benefits that this bill has for the country.”
The businessman explains that among these advantages are: the possible sale of more surplus energy that the country possesses; giving work to skilled labor; and the formalization and regulation of an industry that has been installed in Paraguay for some time.
According to the director of Digital Assets, “the regulations bring clarity” and he hopes that this is understood by the bitcoiners of the Guarani nation:
“In this industry it is more than important that there are clear rules to be able to work and develop the industry in the country. I hope that the community understands that this law is necessary so that we can continue to grow. With clear rules, very soon the financial system will adapt to cryptocurrencies and one will be able to use their digital assets without any problem.”
Juanjo Benítez Rickmann, CEO of Digital Assets.
The miner explains that, together with the Fintech Chamber, they were part of the drafting of the bill. Therefore —as he says— aspects that will benefit both mining and the country were taken into account.
“Investor protection and the creation of the legal, economic, legal and fiscal framework as objectives of this law will make Paraguay the first country in the world to recognize Bitcoin mining as an industry,” says Benítez Rickmann and adds: “this it will result in a great attraction for local and world investors.
“The approval of this law will be positive, not only for the miners but for the entire country”
Pomata is also optimistic. Like his previously cited colleague, the co-founder of Nano Mining explains that the law —promoted by the Fintech Chamber and the miners’ guild— “is born from the need to set clear rules and give a regulatory framework to cryptoactive mining in the Paraguay”.
This businessman assures that “the approval of this law will be positive not only for the miners but for the entire country , since it will be reflected in higher income from the sale of energy, taxes and the hiring of qualified labor.”
Pomata, who says he does not see that there are unfavorable points in the aforementioned legislation, adds that, on the other hand, there are several favorable points:
“The favorable points are the recognition of mining as one more industry that operates in the country; the coordinated work with ANDE for the provision of electric power; and the potential for the development of a financial derivatives market using crypto assets duly regulated by the National Securities Commission.”
– Luis Pomata, co-founder of Nano Mining Paraguay.
As a leading actor in this industry in Paraguay, Pomata is in constant contact with bitcoiners and other miners in his country. He considers that the majority of miners are in favor of the new regulation.
He is also aware that “there is a part of the bitcoiner community that is against it, since they share the idea that crypto assets cannot be regulated due to their decentralized nature.” In any case, he explains that “the regulation will only be explicit in terms of the types and sizes of miners that will have to request licenses” .
“For me, it’s all positive”
Like the other miners cited here, Arriola is excited by the possibility that this bill will finally be approved. He tells us that they have been working on it since 2017 and the Fintech Chamber and the miners’ union had to undergo great media and political exposure.
Paraguay, explains the CEO of BCMining, is a very conservative country in financial matters . The economic security that this feature gives them makes it difficult to incorporate new options. Anyway, he is happy with the work done:
“We are waiting for the answer, in terms of whether the law is enacted or vetoed. In this regulatory framework there is no article that goes against the State or against other laws, so we hope and are, not confident, but sure, that we did the best we could do in the time we had. It is a law that has the best intentions and we had the support of several ministries to get to this point.
– Fernando Arriola, CEO of BCMining Paraguay.
“Is there a negative point in this bill?”, we asked Arriola. “For me, it’s all positive,” was his response. The businessman clarifies that the regulations have several favorable points for various actors in the Bitcoin industry .
“In this bill, cryptocurrencies are considered private securities,” says Arriola. He adds: “we can pay taxes on them, they can be on our balance sheets and they are not taxed sales transactions, that is, they do not pay VAT. They only pay income tax, if there is one, or tax discount, if there is a capital loss.
He adds that another positive point, for him, is that it empowers ANDE : «currently this entity is having a very big loss due to clandestine miners who use State resources, consume energy and then go and connect clandestinely elsewhere. . Furthermore, these miners damage the reputation of the sector in Paraguay.”
Still, Arriola understands that there are people who may not like this bill. “A lot of people who do P2P trading are worried that they’re going to have to register and pay taxes on those bitcoins, and they’re going to have to follow clear guidelines on preventing money laundering.”
Regarding the latter, the businessman says: “there are people or entities that do not want supervision of this class of goods, because they do not understand the direct risks of the market. For example, there are people on the border, in the south, who come to Paraguay to launder money. So the generation of BTC in an unregulated and unsupervised way is a very risky business for the country.”
“The opportunity that Paraguay has in its hands is incredible”
Unlike the three previous interviewees, Grijalba is Spanish and lives in Panama. Anyway, the company he works for, Bariins, has mining operations in Paraguay.
“What general balance do you make of the law approved in the Senate?” CriptoNoticias asked the specialist. His response was favorable to the project :
Being able to count on a regulatory framework for your activity is always positive. So far we have been in a gray area, so in general the balance is very positive, since finally the mining industry is going to operate under very favorable conditions.”
– Fernando Grijalba, Braiins business developer.
Contrary to the Paraguayan miners consulted here, Grijalba does have some not so favorable observations . Although he says that “being exempt from VAT is a great help” he also says that “something that has not been taken into account, and which is one of the country’s main Achilles’ heels, is the issue of tariff rates [for imported hardware]”
He explains that these rates are often out of date with market prices . “That affects up to 15% of the purchase value,” says the specialist and adds: “at this point a great incentive should be given, especially considering Paraguay’s relations with China, since all the hardware comes from the giant Asian”. For Grijalba, “if Paraguay wants to be competitive internationally and attract foreign investment, this is its key point.”
In any case, this inconvenience does not overshadow the good impression that the bill makes on him. In addition, he believes that it will also be taken positively by the Paraguayan bitcoiner community . “As long as there are gray areas, it leads to misunderstandings. Instead, now everything will be clear and we will work according to specific laws of our industry », he maintains.
To finish, the bitcoiner says that “the opportunity that Paraguay has on its hands is incredible” . He details that “the entire mining community is keeping an eye on the country and what is happening”, among other things because of the practically unbeatable cost of kWh that Paraguay has. Grijalba closes his comment by saying that “a very good future is in sight for the country, for the miners and for the Bitcoin network.”