Last year when the crypto market was booming El Salvador looked like it could be on the cutting edge of a key new development in the world economy with its acceptance of Bitcoin and blockchain technology. This led other nations, both developed and developing, to take a more accepting and open approach when it came to cryptocurrency and blockchain technology companies. In particular developing nations really took an approach of acceptance as they tried to develop their nations and catch up to the current powers in the world.

That all changed though once the market went south. Like a light switch, countries across the world began to take a much slower and cooler approach to these companies and this industry. That is not to say it was not done without reason as we have now seen with so many large companies failing and declaring bankruptcy that maybe the approach taken was a bit too hands-off as people in some cases lost their life savings. Recently though even with the bankruptcy announcements more developing countries, Colombia and Paraguay being the two latest, are announcing rules and regulations to set themselves up for investment both now and in the future as the market recovers. 

Colombia

Colombia's government has released a draft of the rules for its regulatory project that is named "Sandbox". This project is extremely unique in what it is setting out to accomplish and this release now allows the public to be able to comment on the proposed rules. While Colombia followed other countries with the standard of making sure that crypto isn't used to fund terror organizations and also has cybersecurity protections it has one key feature that I have not seen another government or government agency pursue. The end goal of this project is to allow citizens to buy crypto with their traditional bank accounts. 

While it might sound crazy as people will clamor not your keys not your crypto it is an approach that I do find really interesting. Colombian banks will be able to partner with major crypto exchanges like Binance or Gemini to allow citizens to acquire Bitcoin, Ethereum, etc. I think that this could become particularly valuable when it comes to all of the transaction fees users can run into trying to get into the space. This creates a shortcut where you do not have to worry about what the debit or credit card fee from the bank on top of the exchange as they will be working together to streamline and cut down on fees. 

Different banks have chosen different exchanges with Gemini landing the largest bank in Colombia and Binance landing the third largest bank. These banks then launched pilot programs for various consumers to mixed success. The programs were supposed to end in March however they appear to still be ongoing. This might be due in part because of the economic conditions as well as the slow adoption that was taking place which means that the government really was not able to get as much data as they would have wanted.  

Paraguay

Where Colombia's crypto legislation appears to be aimed at the people and how they interact with the digital currency Paraguay has taken a much different approach. Paraguay's legislature has passed legislation that creates a tax and regulatory framework for crypto mining in the country. When China cracked down on mining last year Paraguay was a country that came out as Bitcoin-friendly even though to the average person Paraguay is an unknown and unheard of country.

The reason that miners would be so interested in the country and mining in it boils down to two things. First, it has cheap power which is a huge factor especially right now with prices going up and Bitcoin not keeping pace. The second reason is arguably the most important of the two and that is Paraguay from what I understand is the only country that's power comes 100% from renewables. Almost all of this power comes from hydropower which means it is generated 24/7 and even better for miners is that Paraguay produces so much power that it exports 90% of what they generate to their neighbors Argentina and Brazil! 

By recruiting miners the government can do what Texas has been doing and that is improving its grid. Even with all of the power generated and exported the grid suffers from an extremely high transmission and distribution loss. This results in communities really not having the power security that they should and suffering from blackouts. If the government can encourage miners though to come to the country the government can either have these companies build out these necessary lines or use the taxes they collect to upgrade the lines that they have to fix this issue. With the energy all being green it would be huge for companies that are striving to fix Bitcoins energy consumption view and at the same time benefit citizens of this country.

The UN

At the same time though the United Nations, or UN for short, released a report on cryptocurrency and developing nations just last week. Just looking at the headlines discussing the report it is easy to write off the report as a whole. For instance, with Decrypt they titled it "UN Says Developing Nations Should Ban Bitcoin Ads, Regulate Crypto Wallets" it is easy to try and write off the report but in doing so people would miss some of the good points that this report discusses. 

For instance in countries that are developing the populations' education and the legal systems tend to be subpar and prone to abuse. This report highlights that and states that it is a reason to limit if not make illegal crypto ads as they are easy to manipulate poor citizens into giving up what little money they have to scammers. Since these governments often fail to protect the consumers it is understandable to see why outside agencies would say just do not have it then.

The report states several times that this is not an argument against crypto and its future but rather its application of it right now. Even in the United States and Western Europe where the cybersecurity standards are high hacks have been an underlying issue for blockchain bridges and if a country does not have high standards it just leaves people's money all the more vulnerable to malicious actors. All of that being said the wallet tracking is where I do have an issue with the report because bad governments and developing countries go hand in hand so that means the government would be able to crush protest movements much quicker and more efficiently without the publicity that putting down unrest in public has. Overall as this report does make some good points it also makes some really bad ones because we live in the real world which is imperfect. 

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