Paraguay

**Administración Nacional de Electricidad (ANDE)** - The national electricity company (for electricity theft).

**Ministerio Público (Public Ministry/Prosecutor's Office)** - For criminal investigations and prosecutions.

**Policía Nacional (National Police)** - For raids and arrests.

**Entity Targeted:** Numerous individuals and groups operating large-scale, unauthorized cryptocurrency mining farms.

**Theft of Electricity / Illegal Connection to the National Grid:** This is the primary violation.

**Damage to Public Property:** Due to overloaded infrastructure.

**Potential Money Laundering/Illicit Enrichment:** In larger cases, investigations may broaden.

**Fines from ANDE:** Compensation for stolen electricity, often in the hundreds of thousands or even millions of dollars collectively across all operations.

**Criminal Charges:** Arrests, pre-trial detention, and potential prison sentences for theft, fraud, or damage to public assets.

**Confiscation of Equipment:** Thousands of ASIC miners and associated hardware are confiscated.

**Date:** Ongoing throughout the last 3 years (late 2021 - present), with frequent reports of new busts.

**Outcome:** Hundreds of illegal mining farms disconnected, numerous arrests, significant economic losses to operators through equipment confiscation and fines, and continued efforts by authorities to curb the practice.

**April 2024:** ANDE disconnects 34 illegal crypto mining farms in Alto Paraná in just two weeks, leading to estimated losses of US$1.5 million per month for the state.

**Source:** *La Nación* - ANDE desconecta 34 granjas ilegales de criptominería en Alto Paraná en dos semanas

**February 2024:** ANDE disconnects a large illegal mining farm in Villarrica, estimated to cause over US$230,000 in monthly losses to the company.

**Source:** *ABC Color* - ANDE desmantela granja de criptominería clandestina en Villarrica

**July 2023:** A major operation in Ciudad del Este dismantled a large illegal mining farm, leading to arrests and confiscation of high-value equipment.

**Source:** *Ultima Hora* - Desmantelan mega granja de criptominería ilegal en CDE

**January 2023:** ANDE reports detecting over 600 clandestine cryptocurrency mining farms in 2022, causing substantial financial losses.

**Source:** *ABC Color* - ANDE detectó más de 600 granjas de criptominería clandestinas en 2022

**Banco Central del Paraguay (BCP)** - Central Bank of Paraguay.

**Secretaría de Prevención de Lavado de Dinero o Bienes (SEPRELAD)** - Secretariat for the Prevention of Money or Asset Laundering.

**Entity Targeted:** The general public and potential Virtual Asset Service Providers (VASPs).

**Violation Type:** Not applicable, as these are warnings/guidance, not punitive actions.

**Date:** Ongoing, with key updates in 2023-2024.

**Outcome:** Increased awareness of risks, and a clear signal that regulatory oversight for VASPs is developing. SEPRELAD has issued guidance on AML/CFT for VASPs, indicating future enforcement will likely come from them once a comprehensive licensing regime is in place.

**October 2023 (SEPRELAD Resolution):** SEPRELAD issues Resolution No. 343/2023, establishing the regulatory framework for the prevention of money laundering and terrorist financing for VASPs. This means non-compliance with these rules could lead to future fines.

**Source:** *SEPRELAD Official Website* - Resolución SEPRELAD N° 343/2023 (Note: This is the regulatory framework itself, paving the way for future enforcement, not an enforcement action *per se*.)

**July 2022 (BCP Warning):** The BCP issued warnings about the risks associated with cryptocurrencies.

**Source:** *BCP Official Statement* - Comunicado sobre la utilización de criptoactivos en Paraguay

**Law No. 6903/2022 ("Ley que regula la industria y comercialización de criptoactivos")** was the initial, comprehensive attempt to regulate crypto mining and commercialization.

However, this law faced challenges and was **repealed and replaced by Law No. 7041/2023** in January 2023. Law No. 7041/2023 itself underwent a presidential veto primarily regarding crypto mining, which was then overridden by the Congress. This law mainly focuses on the energy consumption and commercialization aspects related to crypto mining, rather than a broad licensing regime for VASPs.

**SEPRELAD (Secretaría de Prevención de Lavado de Dinero o Bienes):** This is the key regulatory body for AML/CFT compliance for virtual assets. SEPRELAD defines Virtual Asset Service Providers (VASPs) and sets forth their obligations.

**Resolution No. 222/2022:** This resolution from SEPRELAD specifically established guidelines for the prevention of money laundering and terrorism financing for Virtual Asset Service Providers. It defines what constitutes a VASP and outlines their obligations.

**Resolution No. 24/2023:** This resolution modified certain aspects of Resolution No. 222/2022, particularly detailing reporting requirements for VASPs.

**FATF Recommendations:** Paraguay, as a member of GAFILAT (the regional FATF-style body), adheres to FATF recommendations, which include guidance on virtual assets and VASPs (Recommendation 15 and its Interpretive Note).

**Law No. 7041/2023:** While primarily focused on the energy aspects of crypto mining, this law indirectly touches upon the commercialization of crypto. However, it does not establish a specific *licensing* regime for VASPs in the sense of financial services licensing, deferring that to SEPRELAD's AML/CFT framework.

**Exchanges (Virtual Asset Exchange Providers):** Entities that conduct the exchange between virtual assets and fiat currencies, or between one or more forms of virtual assets, are considered VASPs.

**Custody Providers (Virtual Asset Custody Providers):** Entities that provide safekeeping services for virtual assets or instruments enabling control over virtual assets are considered VASPs.

**Payment Processors (Virtual Asset Transfer Providers):** Entities that perform transfers of virtual assets on behalf of another natural or legal person. If a payment processor facilitates transactions *involving* virtual assets (e.g., sending/receiving crypto), they would fall under this definition. If they only process fiat payments for crypto services without touching the crypto itself, they might be subject to traditional payment processor regulations but not necessarily VASP-specific rules.

**AML/KYC (Anti-Money Laundering / Know Your Customer):** This is the core requirement.

**Robust Policies and Procedures:** Implementation of comprehensive AML/CFT policies and procedures, including risk assessment, customer due diligence (CDD), enhanced due diligence (EDD) for high-risk customers, and ongoing monitoring.

**Customer Identification and Verification:** Collecting and verifying identity information for natural and legal persons (KYC).

**Transaction Monitoring:** Monitoring transactions for suspicious patterns and activities.

**Suspicious Activity Reports (SARs):** Reporting suspicious transactions to SEPRELAD.

**Compliance Officer:** Appointment of a qualified and designated Compliance Officer responsible for AML/CFT compliance.

**Employee Training:** Regular training for employees on AML/CFT obligations.

**Record Keeping:** Maintaining records of customer identification data and transactions for the prescribed period (usually 5 years).

**Legal Entity:** The VASP must be established as a legal entity (e.g., corporation or limited liability company) duly registered in Paraguay.

**Registered Office:** Maintenance of a physical registered office in Paraguay.

SEPRELAD's resolutions for VASPs do not explicitly define a minimum *capital requirement* for the purpose of AML/CFT registration. However, as a business operating in Paraguay, the entity must demonstrate financial solvency and operational capacity, which implies having sufficient capital to operate responsibly and meet its obligations. Financial institutions, if a VASP were to be considered one, would have capital requirements imposed by the Central Bank (BCP), but currently, VASPs are primarily regulated for AML/CFT purposes, not as licensed financial institutions.

While not explicitly detailed in every SEPRELAD resolution, robust technological infrastructure and security measures are implicitly required to comply with data protection, transaction monitoring, and secure record-keeping obligations. This includes cybersecurity protocols to protect customer assets and data.

Implementation of strong internal controls, governance structures, and internal audit functions to ensure compliance with all regulatory requirements and mitigate operational risks.

**Establish Legal Entity:** Register a legal entity (e.g., an S.A. or S.R.L.) in Paraguay with the Public Registry (Dirección General de Registros Públicos).

**Develop AML/CFT Compliance Program:** Create comprehensive internal policies, procedures, and manuals for AML/CFT, tailored to the VASP's specific operations and risk profile, in accordance with SEPRELAD's Resolution No. 222/2022 and No. 24/2023.

**Appoint Compliance Officer:** Designate a qualified Compliance Officer, who must be registered with SEPRELAD.

**Register as an "Obligated Subject" with SEPRELAD:** Submit all required documentation to SEPRELAD, which typically includes:

Details of shareholders, directors, and beneficial owners.

The AML/CFT manual and risk assessment.

Details and qualifications of the Compliance Officer.

Business plan and operational details.

**Obtain SEPRELAD Approval:** SEPRELAD will review the submission. Upon approval, the entity is officially recognized as an "obligated subject" and can operate, subject to ongoing compliance.

**Ongoing Compliance:** Continuously monitor transactions, perform CDD, file SARs, submit periodic reports to SEPRELAD, and ensure staff training.

**SEPRELAD Official Website:** This is the primary source for their resolutions and public information.

**SEPRELAD Resolution No. 222/2022:** (Often found as a downloadable PDF on the SEPRELAD website under "Normativas" or "Resoluciones")

*Direct link can change, but search "Resolución N° 222/2022 SEPRELAD" on their site.*

**SEPRELAD Resolution No. 24/2023:** (Often found as a downloadable PDF on the SEPRELAD website under "Normativas" or "Resoluciones")

**Law No. 7041/2023:** While focused on mining, it's part of the broader legal context. It can be found on the National Congress website or official gazettes.

*Can be found on the Paraguayan Congress website (e.g., https://www.bacn.gov.py/) by searching for the law number.*

**Law No. 6995/2022:** *Ley que crea el marco regulatorio para la explotación comercial de la minería, comercialización y la industrialización de activos digitales criptoactivos (Law creating the regulatory framework for the commercial exploitation of mining, commercialization, and industrialization of crypto digital assets).*

**Regulatory Reference:** Ley N° 6995/2022, promulgated in December 2022.

**Official Link (to the law's promulgation and text):** Gaceta Oficial de Paraguay (Search for Ley N° 6995)

**Ministry of Industry and Commerce (MIC):** This is the primary regulatory body designated by Law 6995/2022 for issuing operating licenses and overseeing the activities related to the commercial exploitation, mining, commercialization, and industrialization of crypto assets.

**National Electricity Administration (ANDE):** Involved in regulating electricity supply for mining operations.

**Banco Central del Paraguay (BCP):** The BCP has historically maintained a cautious stance. They have issued statements emphasizing that cryptocurrencies are not legal tender in Paraguay and do not fall under their direct regulation as financial instruments or currencies. They typically do not issue licenses for crypto-related financial services.

**BCP Stance Example:** Comunicado del BCP sobre criptomonedas (2021) (While older, it reflects their general position of non-recognition as legal tender/financial instrument under their direct oversight).

**General Operating License:** Law 6995/2022 mandates that any company engaged in the "commercial exploitation, mining, commercialization and industrialization of crypto assets" must obtain an operating license from the **Ministry of Industry and Commerce (MIC)**.

While the law defines "commercialization" broadly, it is not explicitly detailed whether a pure third-party custody service (i.e., not involved in mining or general trading platform operation) falls squarely under this definition, or if a separate, specific "custody license" is required.

The framework is more general for VASP-like activities rather than specialized financial custody.

There is **no specific "crypto custody license"** distinct from the general operating license for crypto businesses established by Law 6995/2022, nor is there a dedicated financial regulator (like the BCP) overseeing crypto custody in the same way they do for traditional financial institutions.

General commercial and consumer protection laws would apply, but there are no specific crypto-focused requirements for asset segregation.

**No Explicit Requirements:** The current legislation does not explicitly mandate insurance coverage or bonding requirements specifically for crypto asset custodians.

Companies operating under Law 6995/2022 would be subject to general corporate liabilities and potential requirements for operational permits, but dedicated crypto custody insurance is not specified.

**No Explicit Mandates:** There are no explicit regulatory mandates in Paraguay for the use of cold storage (offline storage) for digital assets under custody. The law does not prescribe specific technical security measures for asset storage.

**No Specific Definition:** Paraguay's existing legislation does not provide a specific definition for a "qualified custodian" in the context of digital assets, similar to those found in U.S. or European financial regulations.

The general operating license under the MIC would allow an entity to conduct activities, which might include custody, but without a specific definition of "qualified" in terms of financial robustness, capital, or specific operational standards for custody.

As of late 2023/early 2024, the focus has been on the implementation and operationalization of Law No. 6995/2022, which was itself a result of a lengthy legislative process that included a presidential veto of a previous version.

There are **no widely reported or publicly known specific "pending custody legislation"** that would introduce detailed, dedicated rules for digital asset custody, separate from the general framework of Law 6995/2022.

Future regulatory developments might include secondary regulations or decrees from the MIC to further detail the requirements for licensed crypto businesses, which *could* eventually touch upon more specific aspects of custody. However, this is speculative.