Paraguay’s president, Mario Abdo, issued an executive veto of the recently approved cryptocurrency bill. The Abdou Revocation Decree states that cryptocurrency mining is an “energy intensive” and low value added activity. The bill will now be returned to Congress for approval again or rejected in its entirety.
Paraguay’s President considers cryptocurrency mining an energy-intensive activity
Paraguay’s president, Mario Abdo, exercised executive veto power over the recently approved cryptocurrency bill, after more than a year of discussions in the Paraguayan Congress. The project, introduced in July 2021, aims to clarify the rules that cryptocurrency mining operators and other virtual asset service providers must adhere to
The proposed bill stipulated that cryptocurrency miners must pay 15% higher energy fees than other similar industries. However, Adbo’s veto order proves that this activity is “characterized by its high consumption of electrical power, with extensive use of capital and little use of labour”. The executive order presents a grim picture of activity in Paraguay and predicts that if there is significant growth in the industry, the country may be pushed to import energy at some point in the future.
This action could slow the growth of the country’s cryptocurrency and bitcoin mining industry. Some companies have already been considering a potential entry into the country since China’s mining veto last year.
Reasons for the veto
The veto responds to some of the concerns presented by the country’s national authority administration in August. At that time, it stopped supplying some miners with power because of the significant losses it was facing. This was the result of energy theft and energy measurement irregularities committed by some mining companies. The foundation’s officers stated that it had recorded losses of more than $400,000 per month, declaring their opposition to the cost structure presented in the now-vetoed bill, and their support for the partial veto.
The future of the cryptocurrency bill is now uncertain, as it must be sent to Congress for representatives to accept the move or try to pass the encryption bill again. This will not be the first time the president has exercised his veto rights to stop a bill on cryptocurrencies in Latin America, with President Lorentino Cortizo vetoing a similar initiative in Banam last June, citing money laundering concerns related to cryptocurrencies as the reason.