Paraguay will not follow in El Salvador’s footsteps of adopting bitcoin (BTC) as legal tender. A document containing the draft law to regulate it was leaked this weekend on the Internet. The initiative aims to supervise the transactions carried out with cryptocurrencies, that is, all operations are subject to the payment of taxes.
The proposed law aims to “regulate commercial transactions” of blockchain-based digital assets, according to the draft version of the document. At another point in the legislative initiative, deputies Carlos Rejala and Tito Ibarrola urge entities that operate with cryptocurrencies to explain certain considerations to users, including the following:
“Digital assets are not legal tender currencies used by the Paraguayan State, and for this reason they are not backed by the Central Bank of Paraguay.” Legislators propose in the project that any transaction carried out with cryptocurrencies, from and to the country, must be taxed with a percentage yet to be defined.
The corrected document would be presented this July 14 before Congress by Rejala and Senator Fernando Silva. The bill contains seven chapters and exhibits a controlling tone rather than Bitcoin adoption. In one of its articles, the proposal indicates that the Central Bank of Paraguay will have control over the entities that carry out operations with cryptocurrencies.
The import of equipment for the mining of Bitcoin, computer equipment or machines for the development of cryptocurrency exchanges, a VAT rate (Value Added Tax) of 5% would be applied. The only exception for the payment of taxes would be those transactions that result in losses. These must be demonstrated with supports for the exoneration.
Bitcoin traders and hedge fund
Another striking aspect of the bill is that all bitcoin and cryptocurrency traders must have a license to operate. The permits would be issued by a state entity that would be in charge of keeping a record and control about who are the people who trade cryptocurrencies in the country.
“Any person whose main activity is that of a trader must have an authorization issued by a competent authority, which enables him to carry out consultancies or transactions by means of a mandate or administration contract. Legal persons must have authorized personnel to carry out trading with digital assets ”, is explained in the bill.
Those who wish to obtain a license to trade cryptocurrencies must submit the corresponding applications. The official body designated for evaluations must establish the requirements that operators must present. This information must be disclosed within a maximum time of 180 days from the potential approval of the law.
The legislative initiative also talks about the conformation of the so-called Digital Securities Fluctuation Reserve Fund. The entity, which would depend on the Ministry of Finance, would aim to “subsidize the consumer who, having digital assets, they disappear from the market.”
The draft law does not speak of a specific amount with which the fund would start operating. However, the new wallet would be fed with 1% of the taxes paid on cryptocurrency transactions. The legislators’ proposal also states that no Paraguayan citizen is obliged to accept bitcoin or any other digital asset as a form of payment.
Penalties for illegally trading bitcoin
Chapter 4 of the proposal covers sanctions for those entities that operate with bitcoin without proper authorization. Those commercial companies or individuals that carry out transactions without the corresponding permits will be subject to penalties.
The proposed law to regulate Bitcoin would be presented to the Paraguayan Congress this Wednesday, July 14. Source: Cryaven / wikipedia.org
In the case of companies, these would include: cancellation of the commercial registration, the dissolution and forced liquidation of the commercial company, the closure of the trade establishment and economic sanctions. If the offender is a trader as a natural person, then the penalties would be fines.
The draft law to regulate Bitcoin in Paraguay was not well received on social media. From the Hashpy community, a group of enthusiasts of bitcoin and cryptocurrencies in general, the initiative was rejected by saying that it would be an imposition.
«From the Hashpy Community, in Paraguay, the vast majority say NO to the @carlitosrejala bill that they try to impose on us by regulating cryptocurrencies. Taxes on transactions inside / outside the territory, penalties, licenses. Bitcoin and cryptocurrencies have no borders! Transparency “, argued the group on Twitter.
After the presentation in El Salvador of the “Bitcoin Law”, with which BTC will be adopted as legal tender in the country, Paraguay appeared as the second nation that would accept BTC as current currency. However, with this proposed law rejects that possibility. Rather, the text points to greater control of the State, regulations and sanctions, something that could generate rejection and not a greater adoption of bitcoin as a means of payment.