Japan moves to keep crypto gains in the country while Paraguay vetoes a crypto mining bill

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(Kitco News) – Cryptocurrencies continue to see a variety of responses from governments around the world as some have embraced the emerging asset class, while others are trying to outlaw certain aspects of their use to protect their financial interests. 

Japan is firmly in the camp of promoting the benefits of cryptos, as evidenced by a new proposal from the Financial Services Agency (FSA), the country’s financial regulator, which looks to ease the corporate tax on crypto gains in an effort to help strengthen the economy. 

Based on the proposed revision, the FSA is looking to exclude companies from paying taxes for paper gains on cryptocurrencies they hold after issuing them. It also calls for enhancing a program that gives tax breaks to individual investors. 

The agency is making this move in an effort to support Prime Minister Fumio Kishida’s “New Capitalism” vision which is attempting to reinvigorate the world’s third-largest economy. As part of his goal, Kishida has pledged to help grow the country’s Web3 businesses and double the wealth of households. 

The current corporate tax rate of 30% is applied to profit from cryptocurrency holdings, including unrealized gains, which has led some companies to relocate to Singapore or other jurisdictions. This move by the FSA is designed to combat this issue and encourage these companies to remain in Japan.  

Paraguay President vetoes Bitcoin mining bill

Meanwhile, across the Pacific in Paraguay, the news is emerging that Paraguayan President Mario Abdo Benítez has vetoed a popular bill that would have legalized and regulated the Bitcoin and cryptocurrency mining industry in the South American country. 

The plan laid out in the bill was to use surplus electricity generated by hydroelectric plants in the country to mine BTC and other cryptocurrencies. Hydroelectricity is abundant in Paraguay, and two of its largest hydropower stations reportedly create a large amount of surplus energy that currently goes to waste. 

Miners would be allowed to set up their operations at data centers near the power plants, making use of the wasted energy and providing a new source of income for the Latin American nation.  

The draft law was originally approved by the Senate in late December, but Benítez saw the mining industry’s electricity consumption as unsustainable in the long run and chose to veto the bill instead of signing it into law. 

According to Benítez, cryptocurrency mining “requires a high level of electricity consumption that could compromise the development and expansion of an inclusive and sustainable national industry.”

The president cited advice he received from the county’s central bank, which opposed the new initiative, and also pointed to the fact that mining requires “intensive use of capital and low use of manpower,” and “as such, does not generate added value” for the economy.

Proponents of the bill highlighted the fact that Paraguay’s infrastructure is set up to consume fossil fuels rather than hydroelectric power, which means that 10% of the country’s hydroelectric power is “unusable” in the nation.

As for now, the companies that choose to continue to operate crypto mining operations in the country will have to operate in the “gray,” unregulated zone.