Paraguay uses the guaraní, yet the US dollar is highly visible in border trade, tourism and remittances. For this reason many residents in Paraguay are paying attention to stablecoins. According to the Bank for International Settlements (BIS), most global stablecoin activity is concentrated in USDT and USDC. Their growth has raised questions about whether stablecoins can offer practical benefits for households and businesses in Paraguay, and what risks stablecoins carry.
In this third article in The Asunción Times stablecoin series we explain those risks in plain terms, and outline the rules currently in force in Paraguay.
What risks do stablecoins carry?
Stablecoins are designed to track the value of an existing currency, usually the US dollar, with the idea that one token always equals one dollar. In practice this stability can break. The collapse of TerraUSD in 2022 showed how quickly confidence can vanish, wiping out savings in days. Even larger tokens such as USDC have slipped away from the dollar during market stress.
If too many people try to cash out at once, issuers may need to sell their reserves quickly, sometimes at a loss. The BIS warns that such “fire sales” could spread instability to wider markets. Yet critics argue that the same fragility exists in traditional banking. Because banks lend out most of their deposits, they too can face liquidity crises if many customers withdraw at once.
From this angle, the issue is not whether stablecoins are uniquely risky, but whether they should meet the same standards of transparency and oversight as banks.
Moving across borders
Financial crime is also raised as a major issue. Stablecoins can move across borders using only blockchain addresses, which makes it harder to trace ownership. Regulators worry this can attract money laundering or tax evasion. At the same time, the United Nations Office on Drugs and Crime estimates that between 2-5% of global GDP is laundered each year through cash and traditional banking, far outweighing the relatively small share linked to crypto.
Finally, stablecoins can affect the role of national currencies. If people in smaller economies begin using dollar-linked tokens heavily, local money can lose ground. What looks like protection at the individual level may, if widely adopted, create pressure on the national currency. This risk applies mainly to stablecoins pegged to foreign currencies. A guaraní-backed stablecoin, if one were ever introduced, would not weaken the guaraní in the same way.
Paraguay’s legal framework
Paraguay does not have a specific law for stablecoins. In its 31 May 2019 statement, the Central Bank of Paraguay (BCP) warned:
“As they are not issued by a Central Bank, cryptocurrencies have no legal tender or cancelling force. Their value is based mainly on the trust that people place in them […] and users decide to accept these currencies at their own risk.”
Thus, the BCP underlines that crypto assets, including stablecoins, carry no state guarantee, and their stability depends entirely on user confidence.
Although there is no dedicated law yet, Paraguay regulates activities involving stablecoins and other crypto assets through anti-money-laundering rules. The Secretariat of Prevention of Money or Asset Laundering (SEPRELAD) has issued clear legal mandates for digital-asset providers.
Resolution N° 8/2020 classifies individuals and companies involved in mining, exchanging, transferring, storing or administering crypto-assets as Obligated Subjects, requiring them to register, perform customer due diligence, and report suspicious activity. Resolution N° 314/2021 goes further. It requires crypto businesses to set up internal systems to prevent money laundering, appoint a person responsible for checking compliance, and keep track of customer activity to detect and report suspicious transactions.
The Paraguayan tax authority has also made its position clear: cryptocurrencies are treated as private securities. Profits from transactions are taxed at 10% under the corporate income tax, while fees on trades are subject to value added tax.
Legislative efforts and regional cooperation
Lawmakers have introduced several draft bills since 2021. The most recent, in April 2024, proposed recognising Bitcoin as experimental legal tender, creating a state-backed digital currency and regulating virtual assets more broadly. Debate continues and no draft has yet become law.
In March 2025 Paraguay also signed a cooperation agreement with El Salvador’s digital asset commission to exchange information and share best practices. Officials stressed that Paraguay already has tools for supervision and taxation, but needs a full law to avoid an unregulated market.
Balancing innovation and risk
Stablecoins are neither miracle tools, nor inevitable threats. They are private instruments with potential uses, but also with risks that can affect households, businesses and the financial system. As Paraguay debates new rules, the challenge will be to strike a balance: allowing innovation, while protecting consumers and preserving monetary stability.
In the fourth and final article of this series we will show how a stablecoin transaction could look in practice within Paraguay, step by step.
About the author:
Stijn McAdam is an independent analyst focusing on finance, technology, and geopolitics. A former military and law enforcement officer turned entrepreneur and global investor, he writes about markets, sovereignty, and global shifts in power. He is the author of Fit & Free, Crypto from Scratch, and Trade Smart, and regularly shares insights at stijnmcadam.com.
Episode 1: A Beginner’s Overview Of Stablecoins For Paraguay.
Episode 2: Can Stablecoins Lower Remittance Costs For Paraguay?
