Mario Abdo is the president of Paraguay and has announced an executive veto over a cryptocurrency bill that was recently passed. Abdo’s veto decree states cryptocurrency mining is an “energy-intensive” and a low-value-added activity. This bill will then be sent back to Congress, to either be approved or rejected completely.
Paraguay’s President Considers Cryptocurrency Mining a Energy-Intensive Activity
After more than one year of negotiations in the Paraguayan Congress, Mario Abdo has exercised his executive veto over the newly approved cryptocurrency bill. This project was presented in July 2021 and aims to clarify the rules that cryptocurrency miners as well as other providers of virtual assets service must follow on Paraguayan territory.
Proposed bill stated that cryptominers would have to pay 15% more than other 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.
The country’s growth in cryptocurrency and the bitcoin mining sector could be impacted by this action. Since the Chinese mining ban last year, some companies have been looking into possible entry to the country.
Reasons for the Veto
Some concerns expressed by the August national power administration in the country about the veto were addressed with the veto. Due to its significant losses, the veto stopped power supply to miners at that point. These losses were caused by power thefts and irregularities in the power metering system of some mining companies. The institution’s officers stated that it suffered losses exceeding $400,000 per month and they supported a partial veto on the bill.
As the bill needs to be submitted to Congress, the senators will have to decide whether to approve the bill or if they want to amend it. 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.
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