Wednesday, January 26

Central Bank of Paraguay issues warning against Bitcoin

The Central Bank of Paraguay issued a warning against Bitcoin and other private cryptocurrencies, putting the market under pressure in the country.

In the Latin American region, several central banks have already issued warnings against Bitcoin in their history. The one in Brazil, for example, issued an alert in 2017 and is constantly reinforcing in public speeches that cryptocurrencies have neither backing nor guarantees.

Although countries are mostly against this technology, Cuba has opened up transactions to its population, a country facing problems with the US dollar. In the case of Paraguay, a CBDC may be in the plans of the local government.

Paraguay’s Central Bank issues warning against Bitcoin

The Central Bank of Paraguay was one of the few countries in the South region of America that had not yet positioned itself in relation to Bitcoin in recent months. With the subject on the rise, many government agencies started to talk about the market frequently.

But last Wednesday (15), the BC of Paraguay issued an alert against Bitcoin and other cryptocurrencies, which do not have guarantees and are not legal tender.

“In relation to the use of virtual private assets or currencies, known as cryptocurrencies, the Central Bank of Paraguay warns investors and the general public that cryptocurrencies, as they are not issued by a Central Bank, do not have legal tender or cancellation force .”

Regarding the alert, the BCP also stated that this cryptocurrency system is based only on the trust that people place in it. Furthermore, “its price fluctuates according to supply and demand”, with market volatility being high risk.

The monetary authority of the neighboring country to Brazil also declared that cryptocurrencies are means of payment for illicit operations.

“Only Paraguay can issue currency”

Also with regard to the warning against Bitcoin and other cryptocurrencies, the Central Bank of Paraguay recalled that in its constitution there is a law that states that only the authority can issue coins in the territory.

In the newsroom, the BC makes it clear that only the Guarani is an official and forced course currency. Thus, Bitcoin is not currency and is not guaranteed by the State, declared the BCP.

“Consequently, bitcoin and other similar cryptocurrencies are not considered banknotes or coins, do not have mandatory cancellation force in Paraguay and, therefore, do not have the guarantee of the State.”

CBDC from Paraguay is coming

In line with other countries, Paraguay also stated in its communiqué that plans for issuing a CBDC are still being broadly built, through a working group.

According to the agency, only a digital currency issued by the BCP can be safe for use by the population, complementing the national money.

“A digital currency issued by BCP will be able to provide complementary money to the public, adhering to the development of the national payment system, as long as the security of transactions is preserved.”

This alert from Paraguay comes at a time when the country sees growing interest in this sector, after a major event being held at the site in recent days.