On Monday, Paraguay's President Mario Abdo objected to a bill that seeks to recognize cryptocurrency mining as an industrial activity.
This bill returns to the Senate and the Lower House, where lawmakers will have to decide between approving the original text or accepting the presidential veto. In the initial law proposal, the recognition of cryptoactive mining as an industrial activity is the first step to establish a 15 percent tax for its economic operations.
The bill also contemplates the granting of permits of up to five years in favor of cryptoactive service providers and miners, as well as the creation of an institution specialized in the matter.
According to the presidential decree vetoing the bill, however, cryptoactive mining is an activity "characterized by its high consumption of energy, with intensive use of capital, and low use of labor."
Australia is the first country to token map crypto assets which means categorising each asset by its code and technological features. This will provide further regulation to the crypto market #crypto #cryptocurrency #CryptoNews pic.twitter.com/KI3nQgeJK8— SquaredTheOG (@SquaredTheOG) August 22, 2022
For this reason, President Abdo considers that cryptoactive mining should be characterized as an energy- intensive activity that does not generate "added value."
In the same vein, the Industry and Trade Ministry warned that the bill seeks to promote crypto mining activities that would compromise the country's sustainable development since Paraguay would be forced to import energy at some point in the future.
Cryptocurrencies "are not backed by any monetary authority and, therefore, their custody is not supervised... Cryptoactives do not fulfill basic functions of money and constitute high-risk investments," the Paraguayan Central Bank commented.