Ready for Change: Paraguay’s Potential in the Crypto Sector
Paraguayan regulatory agencies are poised to welcome the cryptocurrency sector with open arms. The only element standing in the way is the necessary legislation.
Juan Carlos Reyes, the president of the Comisión Nacional de Activos Digitales (CNAD) in El Salvador, emphasized this sentiment, stating that Paraguay appears to have laid the groundwork for effective supervision, regulation, and tax frameworks. “It feels like they’re just waiting for politicians to approve or propose a formal law to move things forward,” Reyes remarked during a discussion with CoinDesk.
Strengthening Ties: A New Regulatory Agreement
On a recent Friday, Reyes took a significant step towards collaboration by signing a crypto regulatory agreement with Liliana Elizabeth Alcaraz Recalde, the head of Paraguay’s Secretaría de Prevención de Lavado de Dinero o Bienes (SEPRELAD). This agreement aims to enhance cooperation between El Salvador and Paraguay in the realm of cryptocurrency, focusing on crucial areas such as detecting and controlling unlicensed crypto operations and bolstering anti-money laundering (AML) practices.
Reyes also had the privilege of attending a presentation by Paraguay’s Director of Taxation, who shared insights into the country’s proposed strategy for regulating cryptocurrencies once legislative clarity is achieved. “We’ve also been engaging with Paraguay’s Financial Investigative Unit for some time, sharing best practices and studying how El Salvador has successfully regulated and supervised this market,” he noted.
El Salvador’s Global Influence in Crypto Regulation
El Salvador has established one of the most comprehensive crypto regulatory frameworks globally, positioning itself as a leader in the space. Other nations have sought guidance from the small Central American country, with Reyes previously signing a similar agreement with Argentina’s Comisión Nacional de Valores (CNV) back in December.
The Risks of Delayed Regulation
Despite the optimism, Reyes expressed concerns about the delay in implementing clear regulations. He warned that such a delay could foster the growth of an informal crypto market, which could become increasingly difficult to oversee. “If it’s not addressed soon, it could expand to a scale that becomes difficult, if not impossible, to supervise effectively,” he cautioned.
Reyes drew a parallel to the unregulated sale of U.S. dollars outside formal retail channels in various countries, where independent sellers often offer better rates but lack traceability. “Without timely regulation, I worry cryptocurrencies could follow a similar trajectory here, growing to a point that’s tough to manage,” he concluded.
As Paraguay stands at the threshold of crypto adoption, the onus is on its political leaders to act swiftly and ensure that the regulatory framework is established to harness the potential of digital currencies while safeguarding against risks.
