In mid-July, Paraguayan lawmaker Carlitos Rejala intends to introduce a bill to greatly expand the power of Bitcoin within his country. This legislation follows on the heels of El Salvador’s vote to accept Bitcoin as legal tender, a move that shocked the world into action. Their action sent shockwaves across the financial world, triggering both positive and negative reactions depending on the country. While insiders suggest the Paraguay bill falls short of declaring Bitcoin to be legal tender, it would aim to make Paraguay another cryptocurrency hub in Latin America.
Unlike El Salvador, Paraguay’s government is considerably less monolithic. As such, pushing through a unilateral cryptocurrency bill is impossible. Yet, lawmakers across multiple parties appear amenable to expanding Bitcoin’s use throughout the country. An early rash of reports followed El Salvador’s declaration, suggesting that many other Latin American countries intend to introduce crypto-friendly legislation. As the initial excitement dies down, these countries seem more inclined to observe El Salvador for the near future.
El Salvador’s Unexpected Embrace of Bitcoin
At the behest of President Nayib Bukele, El Salvador passed legislation that would make Bitcoin legally accepted currency this September. This served to buoy Bitcoin’s prices after a marked downturn, while also causing intense reactions from other nations. While some developing countries eagerly looked to follow suit – including Paraguay – others turned to heavy regulation and outright bans.
Yet, within El Salvador, the average citizen remains wary of cryptocurrency. In part, this is due to a widespread fear of corruption directed at the government. El Salvador’s governmental stability is a recent phenomenon and came as a result of one-party rule. President Bukele’s plan to introduce Bitcoin as legal tender does include outreach and education programs that may shift this perspective – including airdropping $30 of Bitcoin to every adult in the country.
While El Salvador embraced Bitcoin, China proved itself short-sighted by banning cryptocurrency once again. This occurs at least once per market cycle, and China will likely relax its regulations again shortly. Despite that, bitcoin miners have fled China in droves, causing permanent damage to any Chinese influence on the market.
In the United States and European Union, legislators began eyeing their series of cryptocurrency-related bills. These bills will likely focus on increased regulation and consumer protections – with varying impacts on the average investor. Given the International Monetary Fund’s reluctance to support El Salvador’s Bitcoin push there may be some degree of blowback against the country. The true impact of their Bitcoin adoption won’t be seen for months – if not years.