Bitcoin As Legal Tender. Is Paraguay Next?
A few months ago El Salvador made history. The Central American country approved a project in which bitcoin officially became legal tender. This news generated a lot of buzz among people debating the merits of this development.
Today we have a similar situation with news that Paraguay has decided to follow in El Salvador's footsteps. The South American country proposed a bill where bitcoin is going to be considered legal tender.
If this bill passes, Paraguay would become the second country in the world to adopt bitcoin.
Paraguay Crypto Bill: What’s It About?
At this point, you are probably wondering what this bill proposes or what it aims to achieve. The proposed bill would explore the possibility of bitcoin becoming legal tender in the country. That is, it would become an official currency.
According to this project, the purpose of the bill is to ensure legal, financial, and fiscal security. In doing so, all businesses resulting from the production and commercialization of virtual assets will be completely legal.
The Paraguayan Senate is currently debating this bill. After all, they have to think about the pros and cons that would bring approving this bill.
They also have to examine how to integrate bitcoin into the country's economy. To adopt BTC as legal tender, the population will also have to be educated on this issue.
Regulation and the Paraguayan Crypto Bill?
This debate could cover both taxation and regulation of cryptocurrency. Regulation, however, is a four-letter word for crypto heads. Yet, this hatred regulation is also necessary to support and maintain this project.
This project might regulate crypto mining, trading on exchanges, and peer-to-peer marketplaces. This would require all users to register as obligated entities.
These issues need to be discussed. The government and the Senate must decide what to do beyond maintaining the safety of citizens who are using bitcoin. They must also protect the country's economy.
And to protect the economy of the country they must make sure that these bills are well structured and have plans in place in the event that something goes wrong.
The announcement of this bill came in a rather peculiar environment. Grupo Cinco, Paraguay's largest entertainment holding company, decided to go crypto. They declared that they would start accepting bitcoin and Ether as a method of payment. Right after this announcement, rumors about the bill started. And boy oh boy, were the rumors real.
Lack of Education and Institutional Rejection
Yet, it's not all flowers and colors. Many are not the least bit interested in what bitcoin is or what its potential is. One of them is David Solomon, CEO of Goldman Sachs. In an interview on CNBC's Squawkbox, he stated that he doesn't know much about bitcoin. This was a statement that took many a bit by surprise since he as a banker should know his opposition a bit better.
He was once asked about his clients who are interested in bitcoin and the answer was somewhat blunt. He said that he wanted the clients to do what they wanted.
However, he did declare that the blockchain seems essential to him. He claims that a tool like a blockchain could make digital payments much easier and safer. So not everything is as dark as it seems.
What Can We Expect?
This kind of statement furthers down the debate for proposals like the Paraguayan one. If Paraguay approves the legality of bitcoin as a legal currency, what will be expected from banks? The least would be that the banking institutions know how to handle the matter. They would also be expected to be able to give a complete answer on the subject to their clients.
Maybe with this emphasis of the government of Paraguay in receiving bitcoin as legal tender, something will change. Perhaps this will in one way or another get both citizens and financial institutions interested in crypto.
In summary, Latin America seems to be a few steps ahead compared to other regions. At least at the level of regulations and their conversion into legal tender.
It all started with El Salvador. Now Paraguay also has plans to establish bitcoin as legal tender. The important thing about these developments is that it shows that bitcoin, as well as any other digital currency, is getting more and more attention from financial institutions and governments. Perhaps crypto will be more important than we thought in the future after all.