Paraguayan lawmakers plan to submit new bill to attract crypto companies, hoping to become Latin America's "crypto hub"

Paraguayan congressman Carlos Rejala plans to submit a new bill next month to attract international mining companies and other crypto businesses.

Rejala said the bill allows cryptocurrency companies to finance their Paraguayan operations with cryptocurrencies and capitalize their cryptocurrency profits in local banks.

Rejala, a 36-year-old entrepreneur, discovered Bitcoin in 2017 and started trading in 2019, a year after serving as deputy parliamentarian for the Hagamos Party.

Rejala tweeted a picture of laser eyes on Monday after El Salvador announced it would introduce a bill that would allow bitcoin to be recognized as legal tender.

"This news has made me stop being scared and think this is possible in my country," he said.

He added that the bill aims to position Paraguay as a crypto hub in Latin America and set an example for other countries in the region. If the bill is approved, he will seek to submit a second bill promoting the use of Bitcoin as legal tender.

It’s a long-standing goal of local business leaders, who as early as 2018 touted Paraguay’s cheap energy.

“However, first we want to give Paraguay a blockchain-friendly status,” Rejala said.

One of the most attractive conditions for mining companies is the price of electricity in Paraguay, which is about $0.05 per kilowatt-hour, the lowest in the region. Almost 100% of production comes from hydroelectric power.

“It’s renewable energy, it’s pollution-free, which is extremely important for mining companies,” he said.

Juanjo Benitez Rickmann, CEO of local mining company Bitcoin.com.py, said that mining in Paraguay only requires registration and payment of taxes. Rejala added that currently, the country has a system known as the "three 10s," which includes 10% income tax, 10% value-added tax and 10% personal income tax.

Rejala added that the country’s lack of restrictions on foreign capital flows and dividend payments overseas also makes it an attractive country for crypto investors.

At the Itati hydroelectric plant, which Paraguay shares with Brazil, Paraguay accounts for only 26% of the 6,067 megawatts it is entitled to each month, with the rest going to its neighbor.

"We have a lot of energy that we give away almost for free to Argentina and Brazil, because we can only sell it to our neighbors," Benitez Rickmann said.

Benitez Rickmann said a draft bill backed by different players in the crypto industry has been submitted to several government offices in Paraguay, such as the Anti-Money Laundering Office.

He said Rejala is currently seeking support to get the required 41-vote majority in the House of Representatives and send the bill to the Senate. If approved in both houses, it would then have to be promulgated by the country's president, who has the power to veto.