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Paraguay

Retail_Trading_Status

Unclear Unknown
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Status Changed

Previous status: Gray-Zone

Okay, as a specialized financial regulatory analyst, here's a detailed breakdown of the changes between the "Previous Analysis" (PA) and the "New Analysis" (NA) regarding the Retail_Trading_Status in Paraguay, both dated 2025-06-26. While the overall **Status** remains "Gray-Zone," the **New Analysis (NA)** incorporates more recent specific events, provides a slightly different emphasis on certain aspects, and includes a broader range of source links, reflecting a more current and perhaps more nuanced understanding of the ongoing situation. Here are the detailed changes: 1. **Introduction of "Mining Hub" Context Early On:** * **PA:** Starts with the "Gray-Zone" definition and historical government acknowledgments from 2018. * **NA:** Also starts with "Gray-Zone" but quickly introduces a key contextual point: "Notably, the country has become a hub for Bitcoin mining due to its abundant and inexpensive hydroelectric power." This context, while related, wasn't as prominently featured at the beginning of the PA's narrative. 2. **Elaboration on Legislative Attempts and Veto Reasons:** * **PA:** Mentions a bill passed by Congress and vetoed in Dec 2022. * **NA:** Provides more detail on this 2022 bill: "This bill proposed a licensing system for miners and crypto service providers, to be overseen by the Ministry of Industry and Commerce (MIC), and would subject VASPs to AML laws." It also specifies the vetoing President ("Mario Abdo Benítez") and the reasons for the veto ("citing concerns about energy consumption and the vague nature of some definitions. Later attempts to overturn the veto failed."). This adds significant depth to the legislative history. 3. **Inclusion of More Recent and Conflicting Legislative Discussions:** * **PA:** Mentions an April 2024 Senate proposal to ban mining and trading. * **NA:** Also mentions the April 2024 bill (temporary ban) and adds reasons ("due to concerns about illegal operations and strain on the power grid"). Crucially, it introduces: "Conversely, other legislative proposals have even suggested making Bitcoin legal tender, though these have not gained significant traction and were overshadowed by a false announcement in June 2025 stemming from a hack of the President's social media account." This highlights the highly dynamic and sometimes contradictory nature of legislative discussions, a point not as explicitly made in the PA. 4. **Explicit Mention of the June 2025 False Announcement:** * **PA:** Does not mention this event (as it was likely compiled just before or without full incorporation of this very recent news, despite the same date). * **NA:** Explicitly incorporates the "false announcement in June 2025 stemming from a hack of the President's social media account" regarding Bitcoin legal tender. This is a significant new piece of information that underscores the volatility and confusion in the regulatory space. 5. **Refined Justification for "Gray-Zone" Status:** * **PA:** Concludes that the lack of a clear, specific regulatory framework places the activity in a "Gray-Zone." * **NA:** Provides a more structured rationale for the "Gray-Zone" label: "It is not 'Allowed-Regulated' due to the absence of a dedicated crypto regulatory framework for trading. It is not 'Allowed-Unregulated' either, because there are some AML rules for VASPs and continuous discussions and attempts at broader regulation. It is also not 'Banned'. Therefore, 'Gray-Zone' best describes the current situation..." This is a more explicit analytical justification. 6. **Nuance on AML/KYC Application and Exchange Usage:** * **PA:** States KYC/AML requirements on platforms "may vary." * **NA:** Clarifies that "General financial laws and AML/KYC requirements under SEPRELAD would likely apply to any locally established platforms, but many Paraguayans may use international exchanges." This adds a practical distinction. 7. **Changes in Specific Text Excerpts:** * **Dropped from PA/Not in NA:** * PA's Vouga Abogados excerpts detailing Seprelad Resolution No. 8/20 and 314/21 are not directly replicated, though the substance of AML for VASPs is covered. * Paraguay Pathways (YouTube) excerpt. * Crypto Briefing (June 9, 2025 - related to a fake announcement but PA didn't fully integrate the June 18th one). * Crypto News & Satoshi Voice (March 2025 - El Salvador agreement details). * **Added/Prominent in NA (or different emphasis):** * **Vertex AI Search Result (Source, June 19, 2025):** A new summary source directly stating crypto-assets are not authorized or registered. * **Alvarez & Marsal (November 20, 2023):** Replaces/complements Vouga Abogados for the BCP's 2019 warning. * The NA's excerpts generally reflect the updated narrative, including points about the mining ban proposal and the cautious stance of the BCP. 8. **Significant Expansion and Update of URL Links:** * **PA:** Provided 12 links, some of which were generic Google Search result redirects. * **NA:** Provides a much more extensive list of 19 distinct URLs (though some sources are cited multiple times for different points). These links are more direct and cover a broader range of recent events and discussions, including: * Multiple sources on the El Salvador cooperation (NewsBTC, Crypto Economy, Bitget News). * Sources on the fake Bitcoin legal tender tweet (TradingView, Crypto Briefing). * More articles on legislative debates (FXEmpire, The Crypto Times, Phemex). * A broader selection of general regulatory status articles. * This indicates a more thorough and recent sweep of available information for the NA. 9. **Slight Rephrasing and Emphasis in Shared Information:** * For instance, regarding Seprelad's AML/CFT role, PA mentions specific resolutions (8/20, 314/21). NA summarizes this as SEPRELAD issuing "regulations requiring Virtual Asset Service Providers (VASPs) to register and comply with AML/CFT... obligations." The substance is similar, but the presentation differs. * The BCP's stance is consistently reported, but NA might frame the "risks" more broadly (volatility, fraud, illicit activities). **Summary of Changes in Analysis Result:** The core "Gray-Zone" assessment remains unchanged. However, the **New Analysis** presents a more current and dynamic picture by: * **Incorporating very recent events:** Specifically, the June 2025 false legal tender announcement and its implications. * **Adding more depth to legislative history:** Providing reasons for the 2022 bill veto and highlighting conflicting legislative proposals. * **Refining the justification for the "Gray-Zone" status:** Offering a more structured analytical argument. * **Expanding the evidence base:** Utilizing a wider array of more recent sources and direct URLs. * **Shifting emphasis slightly:** For example, by introducing the "mining hub" context earlier and detailing the reasons behind legislative actions and proposals. The New Analysis reflects an updated understanding based on the latest developments and a broader information scan, leading to a more nuanced and detailed explanation of why Paraguay's retail crypto trading environment is considered a "Gray-Zone," even though the overarching label hasn't changed. It paints a picture of a regulatory landscape that is not static but actively (and sometimes confusingly) evolving.

Analysis ID
#381
Version
Latest
Created
2025-06-26 12:47
Workflow Stage
Live

Executive Summary

The regulatory status of retail cryptocurrency trading in Paraguay is Unclear, lacking comprehensive regulation. While not explicitly banned, the activity is subject to AML/CFT measures targeting Virtual Asset Service Providers (VASPs) overseen by SEPRELAD. The Central Bank of Paraguay (BCP) does not recognize cryptocurrencies as legal tender and has issued warnings about their risks. Recent legislative efforts include proposals for both temporary bans and comprehensive regulatory frameworks, highlighting ongoing uncertainty.

Key Pillars

  • Primary regulator: The Central Bank of Paraguay (BCP) and its Superintendencia de Valores issue warnings and clarifications but do not directly regulate crypto transactions.
  • Key compliance requirements: AML/CFT regulations are enforced by the Secretariat for the Prevention of Money or Asset Laundering (SEPRELAD) for Virtual Asset Service Providers (VASPs), including KYC/CDD and suspicious activity reporting.
  • Licensing/registration requirements: VASPs are considered "Obligated Subjects" and must comply with AML/CFT regulations, but there is no specific licensing or registration regime for crypto trading itself.

Landmark Laws

  • Law N° 1015/97: Paraguay's primary AML/CFT law, under which VASPs are designated as "Obligated Subjects" by SEPRELAD Resolution N° 8/2020.
  • SEPRELAD Resolution N° 8/2020: Designates individuals and legal entities involved in virtual asset activities as "Obligated Subjects" under Law N° 1015/97, Paraguay's primary AML/CFT law.
  • SEPRELAD Resolution N° 314/2021: Approved specific AML/CFT regulations for VASPs, requiring risk management systems, customer due diligence (KYC), and reporting suspicious activities.
  • Decree N° 7.692/22 (December 2022): Presidential veto of a bill regulating crypto mining, commercialization, intermediation, exchange, transfer, custody, and administration. The veto was upheld by the Chamber of Deputies.

Considerations

  • Cryptocurrencies are not legal tender in Paraguay.
  • Cryptocurrencies lack state guarantee or backing.
  • Value relies solely on user trust.
  • High-risk investments due to volatility, fraud, and operational risks.
  • Potential for total loss of invested capital.
  • Concerns over illegal electricity consumption by crypto mining operations.
  • Recognition of Bitcoin as experimental legal tender is under consideration.
  • AML/CFT compliance is required for VASPs.

Notes

  • In mid-2022, Congress passed a bill aimed at regulating crypto activities, but it was vetoed by the President in December 2022 (Decree N° 7.692/22) and subsequently archived.
  • In April 2024, a bill proposing a temporary ban on virtual assets and crypto mining was introduced.
  • In April 2024, another bill aimed for comprehensive regulation, including recognizing Bitcoin as experimental legal tender.
  • In May 2024, yet another bill specifically targeting the regulation of crypto mining was presented.
  • In March 2025, SEPRELAD signed a Memorandum of Understanding (MOU) with El Salvador's National Digital Assets Commission (CNAD) to enhance cooperation and information exchange.
  • The BCP has repeatedly stated that cryptocurrencies are not legal tender and do not have state backing.
  • The regulatory landscape is described as fluid, with conflicting legislative efforts indicating ongoing debate and uncertainty.

Detailed Explanation

The regulatory landscape for retail cryptocurrency trading in Paraguay is currently Unclear. There is no specific legal framework governing the issuance, trading, or holding of cryptocurrencies by individuals. The Central Bank of Paraguay (BCP) does not control, supervise, or regulate cryptocurrency transactions. The BCP and its Superintendencia de Valores have issued warnings that cryptocurrencies are not legal tender, lack state backing, and are high-risk investments with potential for total loss. Despite the lack of specific regulation, Paraguay's Secretariat for the Prevention of Money or Asset Laundering (SEPRELAD) has implemented AML/CFT measures targeting Virtual Asset Service Providers (VASPs), following Financial Action Task Force (FATF) recommendations. SEPRELAD Resolution N° 8/2020 designated entities involved in virtual asset activities as "Obligated Subjects" under Law N° 1015/97, the primary AML/CFT law. SEPRELAD Resolution N° 314/2021 approved AML/CFT regulations for VASPs, requiring risk management systems, customer due diligence (KYC), and suspicious activity reporting. In mid-2022, a bill aimed at regulating crypto mining, commercialization, intermediation, exchange, transfer, custody, and administration was passed by Congress but was vetoed by the President in December 2022 (Decree N° 7.692/22) due to concerns from the National Electricity Administration (ANDE) regarding electricity tariffs for miners. The veto was upheld by the Chamber of Deputies, archiving the bill. In April 2024, a bill was introduced proposing a temporary 180-day ban on virtual assets and crypto mining, driven by concerns over illegal electricity consumption. Simultaneously, another bill proposed a comprehensive regulatory regime, recognizing Bitcoin as experimental legal tender until a national digital currency is developed. In May 2024, a separate bill specifically targeting crypto mining regulation was also presented. In March 2025, SEPRELAD signed a Memorandum of Understanding (MOU) with El Salvador's National Digital Assets Commission (CNAD) to enhance cooperation and information exchange on digital asset service providers, focusing on combating unlicensed operations and money laundering. Altra Legal stated in February 2025 that Paraguay still lacks specific regulation for cryptocurrencies, their issuers, or intermediaries, despite several years of analysis and study. Livieres Guggiari noted in April 2024 that AML/CFT regulation implies the validity and legality of cryptocurrency activities within the scope of AML compliance. The CONACOM issued an opinion in June 2024 on the bill to ban crypto mining, stating that the bill is under study in the Chamber of Senators.

Summary Points

Retail Cryptocurrency Trading in Paraguay: Regulatory Analysis (April 12, 2025)

Overall Regulatory Status: Unclear

  • Exists in a legal grey area: Not explicitly prohibited, but lacks specific, comprehensive regulation.
  • Characterized by:
    • Absence of dedicated legal framework for retail crypto trading.
    • Targeted AML measures for service providers.
    • Official warnings about risks from regulatory bodies.

1. Key Regulatory Bodies and Their Roles

  • Central Bank of Paraguay (BCP):
    • Does not control, supervise, or regulate cryptocurrency transactions.
    • Has repeatedly stated that cryptocurrencies are not legal tender.
    • Emphasizes that cryptocurrencies lack state guarantee or backing.
    • Superintendencia de Valores (under BCP) issues warnings about risks.
  • Secretariat for the Prevention of Money or Asset Laundering (SEPRELAD):
    • Implements AML/CFT regulations for Virtual Asset Service Providers (VASPs).
    • Designates VASPs as "Obligated Subjects" under AML/CFT law (Law N° 1015/97).
    • Requires VASPs to implement risk management systems, KYC, and report suspicious activities (Resolution N° 314/2021).
  • National Electricity Administration (ANDE):
    • Raises concerns about preferential electricity tariffs for crypto miners.
    • Concerns contributed to the presidential veto of the 2022 crypto bill.
  • National Digital Assets Commission (CNAD) of El Salvador:
    • Signed MOU with SEPRELAD to enhance cooperation and information exchange.

2. Important Legislation and Regulations

  • Law N° 1015/97: Paraguay's primary AML/CFT law, under which VASPs are designated as "Obligated Subjects".
  • SEPRELAD Resolution N° 8/2020: Designates individuals and legal entities involved in virtual asset activities as "Obligated Subjects" under Law N° 1015/97.
  • SEPRELAD Resolution N° 314/2021: Approves specific AML/CFT regulations for VASPs, including KYC and reporting requirements.
  • Failed Legislation (2022):
    • Comprehensive bill aimed at regulating crypto mining, commercialization, intermediation, exchange, transfer, custody, and administration.
    • Passed by Congress but vetoed by the President (Decree N° 7.692/22) due to concerns about electricity tariffs.
    • Veto was upheld by the Chamber of Deputies, leading to the bill being archived.
  • Proposed Legislation (2024):
    • Bill proposing a temporary ban on the creation, conservation, storage, and commercialization of virtual assets and cryptocurrencies, as well as the installation of crypto mining farms.
    • Bill aiming for a comprehensive regulatory regime, including recognizing Bitcoin as an experimental legal tender.
    • Bill specifically targeting the regulation of crypto mining.

3. Requirements for Compliance

  • For Virtual Asset Service Providers (VASPs):
    • Compliance with AML/CFT regulations established by SEPRELAD.
    • Implementation of risk management systems.
    • Customer Due Diligence (KYC) procedures.
    • Reporting of suspicious activities.

4. Notable Restrictions or Limitations

  • Lack of Legal Tender Status: Cryptocurrencies are not legal tender in Paraguay.
  • Official Warnings: BCP and Superintendencia de Valores warn about the high risks associated with cryptocurrencies, including volatility, potential for fraud, and total loss of invested capital.
  • Potential Ban: Proposed legislation could temporarily ban crypto activities.

5. Recent Developments or Changes

  • April 2024: Introduction of conflicting legislative proposals: one for a temporary ban, another for comprehensive regulation.
  • March 2025: SEPRELAD signed a Memorandum of Understanding (MOU) with El Salvador's CNAD to enhance cooperation and supervision related to digital asset service providers.

Full Analysis Report

Retail_Trading_Status: Paraguay

Report Date: 2025-06-26

Topic: Retail_Trading_Status
Description: Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued)

1. Current Status:

Gray-Zone

2. Detailed Narrative Explanation:

As of June 2025, the status of retail cryptocurrency trading in Paraguay resides in a "Gray-Zone". While not explicitly banned, and individuals can technically buy, sell, and hold cryptocurrencies, the regulatory landscape remains largely undefined and characterized by a cautious approach from authorities. There are no specific, comprehensive laws governing cryptocurrency trading for individuals, leading to an environment of minimal direct control but also inherent risks and uncertainties.

Historically, Paraguay has shown some interest in the potential of cryptocurrencies and blockchain technology. Notably, the country has become a hub for Bitcoin mining due to its abundant and inexpensive hydroelectric power. However, this has not translated into a clear legal framework for cryptocurrency trading or its official recognition as a means of payment.

The Central Bank of Paraguay (BCP) has consistently stated that cryptocurrencies are not legal tender and are not authorized or registered for use within the national financial system. The BCP has issued warnings to the public about the risks associated with cryptocurrencies, including their volatility, potential for fraud, and use in illicit activities. These warnings emphasize that individuals engaging with cryptocurrencies do so at their own risk.

The Secretariat for the Prevention of Money or Asset Laundering (SEPRELAD) has expressed concerns about the use of cryptocurrencies in money laundering schemes and has taken steps to address these risks. SEPRELAD has issued regulations requiring Virtual Asset Service Providers (VASPs) to register and comply with AML/CFT (Anti-Money Laundering/Counter-Financing of Terrorism) obligations. This indicates some level of oversight for entities involved in crypto-related activities, though the direct impact on individual retail traders operating on international platforms might be less direct. In March 2025, SEPRELAD and El Salvador's National Digital Assets Commission (CNAD) announced a cooperation agreement to enhance oversight of the crypto sector and reinforce AML measures.

Several legislative attempts to regulate cryptocurrencies have been made. A significant bill aimed at regulating crypto mining and commercialization was passed by Congress in 2022. This bill proposed a licensing system for miners and crypto service providers, to be overseen by the Ministry of Industry and Commerce (MIC), and would subject VASPs to AML laws. However, this bill was subsequently vetoed by the then-President Mario Abdo Benítez, citing concerns about energy consumption and the vague nature of some definitions. Later attempts to overturn the veto failed.

More recently, in April 2024, a new bill was introduced in the Senate proposing a temporary ban on cryptocurrency mining and related activities like storing and trading, due to concerns about illegal operations and strain on the power grid. Conversely, other legislative proposals have even suggested making Bitcoin legal tender, though these have not gained significant traction and were overshadowed by a false announcement in June 2025 stemming from a hack of the President's social media account. These conflicting legislative efforts highlight the ongoing debate and uncertainty surrounding cryptocurrency regulation in Paraguay.

Currently, cryptocurrency exchanges operate in this regulatory gray area. While not explicitly illegal, they are not directly licensed or regulated by Paraguayan financial authorities for the specific purpose of retail crypto trading. General financial laws and AML/KYC requirements under SEPRELAD would likely apply to any locally established platforms, but many Paraguayans may use international exchanges. The government has advised citizens to avoid engaging with crypto firms that are not registered or regulated by the Superintendencia de Valores (the country's financial regulator, though its direct oversight of crypto is still developing).

In summary, individuals in Paraguay can engage in cryptocurrency trading, but they do so in an environment that lacks specific, comprehensive regulation for this activity. While AML/KYC requirements are being imposed on service providers, and the Central Bank issues warnings, the legal status for retail users themselves is not explicitly defined as "Allowed-Regulated" due to the absence of a dedicated crypto regulatory framework for trading. It is not "Allowed-Unregulated" either, because there are some AML rules for VASPs and continuous discussions and attempts at broader regulation. It is also not "Banned". Therefore, "Gray-Zone" best describes the current situation, reflecting the mixture of de facto allowance, cautionary official statements, emerging AML oversight for intermediaries, and an ongoing, complex legislative and regulatory evolution.

3. Specific, Relevant Text Excerpts:

  • Coinfomania (June 18, 2025): "Absence of Formal Laws: As there are no formal cryptocurrency laws, Paraguay is in the gray zone of the regulation. Although cryptocurrencies lack any reference to the law, the government has not tried to prevent their use, and this has made it a relatively free space to the digital currencies."
  • Coinfomania (June 18, 2025): "Usage: Cryptocurrencies are not legal tender in Paraguay, which means that they cannot be used by businesses and individuals to pay debt or tax. Nevertheless, it is not a crime that prevents people from accepting digital currencies as payment of goods and services in a private business."
  • AInvest (June 18, 2025): "Paraguay has adopted a cautious yet open approach towards cryptocurrencies, allowing their use without making them legal tender. The government has shown interest in monitoring the evolving landscape of digital currencies, but there are currently no specific laws governing their use."
  • AInvest (June 18, 2025): "The BCP has clarified that virtual currencies are not legal tender and has cautioned about the associated risks. Seprelad, on the other hand, is concerned about the use of cryptocurrencies in money laundering schemes."
  • Vertex AI Search Result (Source, June 19, 2025): "As of June 2025, Paraguay has not legalized or officially recognized cryptocurrencies as a means of payment. The Central Bank of Paraguay and the Superintendencia de Valores (the country's financial regulator) continue to state that crypto-assets are not authorized or registered for use within the national financial system."
  • UEEx Technology (April 28, 2025): "Are Crypto Exchanges Legal in Paraguay? Cryptocurrency exchanges operate in a regulatory gray area in Paraguay. While the government hasn't explicitly banned crypto trading, there's no comprehensive legal framework yet."
  • VIXIO Regulatory Intelligence (Undated, referencing events up to 2022/2023): "The bill would include virtual asset service providers in the scope of the country's anti-money laundering (AML) laws. This means that crypto exchanges, crypto-asset managers and crypto-custody service providers will be required to register with the country's financial intelligence unit, SEPRELAD, and comply with the existing AML rules." (This refers to the bill later vetoed, but indicates SEPRELAD's intended role).
  • Alvarez & Marsal (November 20, 2023): "On May 31, 2019, the BCP issued a statement to investors and the general public, warning about the use of cryptocurrencies. It emphasized that, as they are not issued by a Central Bank, cryptocurrencies have no legal tender or canceling force."
  • Forbes (April 7, 2024): "Paraguay is discussing to set stricter regulations around bitcoin mining in the country... This proposed law also aims to prohibit the storage and trading of cryptocurrencies... It's unclear if this new proposal will have the same fate [as a previous vetoed bill]. But it shows that even under the administration of the new president, Santiago Peña, bitcoin mining and cryptocurrencies in general are still a concern for policymakers in the country."
  • Bitget News (March 10, 2025): "Paraguay's Central Bank clarified that cryptocurrencies remain unregistered and unauthorized in the country, urging citizens to avoid unregulated crypto platforms."

4. Direct, Accessible URL Links to Specific Sources:

(Note: Some URLs are inferred based on the provided information and may require a specific search on the host website if the direct link isn't perfectly accurate. Prioritize accessing the source through the main domain if a direct link fails.)

Web Sources (18)

Sources discovered via web search grounding

Search queries used (6)
  • Paraguay cryptocurrency regulation status 2025
  • Paraguay retail crypto trading laws and regulations 2025
  • Paraguay AML KYC cryptocurrency requirements 2025
  • Paraguay Central Bank cryptocurrency official statements 2025
  • Paraguay cryptocurrency bill status 2025
  • Paraguay cryptocurrency mining regulations 2025
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