Self-custodial wallet / non-custodial software in Paraguay
Publisher of software where users hold their own private keys. The publisher never holds, controls, or has access to user funds.
Self-custodial wallet is conditionally permitted in Paraguay with a local entity, subject to AML obligations and none licensing burden.
Verdict Details
- Permitted
- conditional
- Local entity required
- Yes
- Licensing burden
- None
- Last updated
- 2026-07-13
AML Obligations
- No AML obligations attach to a non-custodial software publisher — the publisher never holds, controls, or has access to user funds, and thus does not meet the VASP definition under SEPRELAD Resolution No. 222/2022.
- SEPRELAD defines VASPs as entities that exchange, custody, or transfer virtual assets on behalf of another person. A self-custodial wallet publisher does not perform any of these functions.
- If the publisher were to also offer hosted-wallet or custodial services (beyond pure software publishing), it would become a VASP and be subject to SEPRELAD obligations: customer identification/KYC, transaction monitoring, SARs to SEPRELAD, compliance officer appointment, record keeping (5 years), and employee training.
Key Restrictions
- The publisher must not hold, control, or have access to user private keys or funds — doing so would trigger VASP classification under SEPRELAD Resolution No. 222/2022.
- If any value-added service is offered (e.g., swapping, fiat on/off ramps, staking-as-a-service), those functions may fall under the VASP definition and require registration with SEPRELAD.
- The entity should be established as a legal entity in Paraguay if providing any commercial services to Paraguayan residents beyond pure software distribution.
Key Risks
- Regulatory ambiguity: Paraguay's crypto framework (Law 6995/2022, Law 7041/2023) is primarily focused on mining and commercialization — pure software/wallet publishing is not clearly addressed, creating interpretive risk.
- SEPRELAD could reinterpret VASP definitions broadly to include wallet software publishers, particularly if the software includes built-in swapping or other financial features.
- Future secondary regulations from MIC or SEPRELAD may expand the scope of regulated activities to include non-custodial wallet software, creating retroactive compliance risk.
- Consumer protection liability claims could arise if users suffer losses due to software bugs or security vulnerabilities, with no specific crypto-software liability framework in place.
Evidence
This verdict synthesizes the following facts. Each fact links to its primary source(s).
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.
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.
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.
The framework is more general for VASP-like activities rather than specialized financial custody.
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.
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.
Verdict Attribution
- Source:
- AI-Generated · Unreviewed
- AI synthesized:
- 2026-07-13 (deepseek-chat)
- Last updated:
- 2026-07-13
- Confidence:
- medium
This verdict was produced by an AI model from the underlying facts. Confirm with counsel before relying on it for material decisions.
Conditional — a pure non-custodial wallet software publisher (no access to private keys or funds) is not classified as a VASP under Paraguay's SEPRELAD framework and faces no AML obligations, but must avoid offering any custodial, exchange, or transfer services that would trigger VASP registration requirements.
Questions this verdict aims to answer
- Does software publishing trigger VASP / MSB classification?
- Do AML obligations attach when no custody exists?
- What disclosure or consumer-protection rules apply?