The President of Paraguay, Mario Abdo has issued an executive veto on a recently approved cryptocurrency bill. Abdo’s veto decree states cryptocurrency mining is an “energy-intensive” and a low-value-added activity. The bill will now be returned to Congress to be approved again or to be rejected entirely.
President of Paraguay Considers Cryptocurrency Mining an Energy Intensive Activity
The President of Paraguay, Mario Abdo, has exerted an executive veto on the recently approved cryptocurrency bill, after more than a year of discussions in the Paraguayan Congress. The project, which was introduced in July 2021, aims to clarify the rules by which cryptocurrency mining operators and other virtual asset service providers must abide on Paraguayan soil.
The proposed bill established that cryptocurrency miners should pay a power fee 15% higher than what is paid by other similar industries. However, Adbo’s veto order establishes that this activity is “characterized by its high consumption of electrical energy, with intensive use of capital and little use of labor.” The executive order presents a bleak picture of the activity in Paraguay, predicting that if there is significant growth in this industry, the country might be pushed to import energy at some time in the future.
This action might slow the growth of the cryptocurrency and bitcoin mining industry in the country. Some companies had already been examining a possible entrance into the country since the Chinese mining veto that occurred last year.
Reasons Behind the Veto
The veto answers some concerns presented by the national power administration of the country in August. At that time, it stopped supplying power to some miners due to the significant losses it was facing. This was the consequence of the power theft and power metering irregularities perpetrated by some mining companies. Officers of the institution stated it had registered losses of more than $400,000 monthly, declaring their opposition to the cost structure presented in the now vetoed bill, and their support for a partial veto move on it.
The future of the cryptocurrency bill is now uncertain, as it will need to be sent to Congress for the representatives to accept this move or try to pass the crypto bill again. This would not be the first time that a president exerts his veto rights to stop a cryptocurrency-related bill in Latin America, as president Laurentino Cortizo vetoed a similar initiative in Panam last June, citing cryptocurrency-related money-laundering concerns as the cause.