In a WhatsApp conversation I had with Paraguayan Congressman Carlitos Rejala, he shared a draft law to regulate Bitcoin in Paraguay.

“We would like to welcome the innovation of cryptocurrencies in Paraguay in the world,” said Rejala on WhatsApp. “This is the result of a very strong and arduous teamwork of many experts in this field from home and abroad.”

A translated version of the bill refers to Bitcoin and other cryptocurrencies as “virtual assets”, “cryptoactive” and “cryptocurrency”.

This draft law was eight pages long, filled with 22 articles, which was worked on together with Senator Silva Facetti. This bill is much longer than the bill recently passed by El Salvador, which recognizes Bitcoin as legal tender, which does not contain as many individual regulations.

This bill suggests that Paraguay’s lawmakers are seeking tight control over Bitcoin mining in the country, trying to provide investor protection from Bitcoin deals, and specifically advising that Bitcoin is not legal tender in the country.

The law wants to require Bitcoin mining licenses

As noted in “Article 5”, a proposed virtual asset mining license granted by the powers of the Department of Industry and Commerce (MIC) would be required for any company mining Bitcoin. “Article 10” goes into greater detail on the fact that those who want to mine Bitcoin must “apply for authorization for industrial electricity consumption”. Then they can then apply for the “permit license for industrial exploitation” for Bitcoin mining.

The proposed law would require Bitcoin miners to acquire an operating license.

The law aims to protect Bitcoin investors

“Article 11” states that providers of Bitcoin sales are prohibited from “selling, assigning or transferring their property, giving it as a loan or guarantee, or the use and enjoyment of the virtual assets they manage or guard for third parties without the express permission of the owner. “

This would apparently protect Bitcoin investors whose private keys are in the possession of a company like an exchange or bank from their Bitcoins being fractionally reserved or otherwise used without their consent.

The law would recognize Bitcoin as property rather than legal tender

“Article 3” of the bill defines Bitcoin as property, as it is defined in many other countries, and assures that it can be officially bought, sold and licensed. And “Article 14” made it clear that Bitcoin would not be recognized as legal tender, stating: “The trading companies for virtual assets must inform the acquirer of the trading conditions with virtual assets and expressly state that the virtual assets are not recognized as legal tender Therefore they are not supported by the Central Bank of Paraguay. “