One of the world’s top crypto law firms, Gresham International, announced this week that it submitted a proposal to begin working with the government of Paraguay on a raft of new cryptocurrency legislation.
According to CryptoSlate, the Managing Associate of Gresham International, Cal Evans said that the proposal would see Gresham International working with the domestic government to assist them to create laws that would meet the needs of both the country and the cryptocurrency community.
“Gresham International are the market leaders in Cryptocurrency & Security Token Compliance and Legal Services. Since 2016 they have assisted entrepreneurs, companies, governments, and groups launch their currency or token offering to market.”
Something they have done before in other jurisdictions such as Labuan with the creation of new Security Token laws.
This decision makes it clear that the government of Paraguay observes cryptocurrencies as a long-term opportunity for foreign companies as well as for citizens. “The government takes very seriously the introduction of new legislation on cryptocurrencies that will transform them into a regional leader.”
While countries such as China and Switzerland are developing their own digital currencies, Paraguay has no expansion plans of such dimensions; however, the new laws are expected to be effective by 2020, if they are approved. In addition to Bitfury’s plans to establish bitcoin mining operations in Paraguay, a more sustainable future for this country can be envisioned on the blockchain platform.
Paraguay is also acutely aware that its biggest trading partner China, is heavily involved in cryptocurrency and blockchain projects. They believe that by deploying some of the same technologies, it could show them as being, in an ideology sense, technologically equal to their Asian trading partner. Especially, with the roll-out of blockchain technology in areas such as transport.
During Evans’ top-level discussions with the government, it was understood that the country is now looking at cryptocurrency as a long term opportunity for both their citizens and foreign companies doing business in the country, although it is made clear that the country has no plans to develop its own domestic digital currency at this time.
One of the economical problems currently faced by Paraguay is nationals from other countries establishing mining operations within the country. These operations exploit the relatively cheap and stable electricity available, a situation not mirrored in every South American country.
After successfully mining, these foreign nationals then remove their cryptocurrency without paying any domestic tax. This removal without tax is due to the current tax laws not covering cryptocurrency mining.
Cryptocurrency influences in Latin America embrace the continent progressively. A similar case occurs in Venezuela, although with a little more progress compared to Paraguay because the South American nation already has its digital currency, Petro, or as the government of Argentina which imposed rules on exchanges to force them to bring information to the government about their clients.
The government and regulators are keen to strike a balance between protection and attraction for those working in the cryptocurrency market.
It is understood that during discussions, this was one of many issues addressed by the government that the new laws would look to solve.