El Salvador & Paraguay Just Signed a Crypto Deal—But Will It Actually Work?

In a surprising turn of events, El Salvador’s Comisión Nacional de Activos Digitales (CNAD) and Paraguay’s Secretaría de Prevención de Lavado de Dinero o Bienes (SEPRELAD) have signed a Memorandum of Understanding (MoU) to collaborate on digital asset regulation. While cooperation sounds great on paper, the reality is that these two nations have very different stances on crypto—raising questions about how effective this partnership can truly be.

An Unlikely Crypto Alliance

El Salvador has been at the forefront of crypto adoption, becoming the first country in the world to make Bitcoin legal tender in 2021. Under President Nayib Bukele, the nation doubled down on BTC, even as its citizens largely rejected the move. The government has continued accumulating Bitcoin for national reserves, despite mixed results.

On the other hand, Paraguay has taken a far more cautious approach. The country has attracted Bitcoin miners due to its cheap energy, but the Central Bank of Paraguay still refuses to recognize BTC as legal tender. As recently as two weeks ago, it issued a reminder that digital assets are not backed by the state and urged citizens to operate only within the regulated financial system.

So, how do two nations with such opposing views on crypto expect to work together on digital asset regulation?

What’s Really Going On?

At its core, this agreement is about information sharing and regulatory alignment. The MoU aims to:

• Enhance cooperation between El Salvador and Paraguay on crypto oversight.
• Exchange knowledge on supervising digital assets.
• Prevent regulatory loopholes that virtual asset service providers (VASPs) could exploit.

El Salvador’s CNAD President Juan Carlos Reyes emphasized that this partnership is about strengthening international alliances and ensuring financial integrity in an increasingly digital economy.

“This agreement not only fosters innovation but also ensures financial integrity in a borderless economy,” Reyes stated.

But here’s the real question—will Paraguay embrace crypto more fully, or will this partnership just be a knowledge exchange with little real impact?

A Growing Pattern in Latin America

This isn’t El Salvador’s first crypto partnership. In December 2024, El Salvador signed a similar agreement with Argentina’s Comisión Nacional de Valores (CNV).

Interestingly, Argentina ranked in the top 20 for global crypto adoption last year, trailing Brazil, Venezuela, and Mexico. Unlike Paraguay, Argentina is already deeply involved in digital assets, making that partnership seem more natural.

Could Paraguay follow Argentina’s lead and start softening its stance on digital assets? Or will it continue walking the tightrope between attracting crypto miners and keeping its financial system closed off to broader adoption?

Final Thoughts—What’s Next?

This partnership could go in two directions:

A step toward Paraguay embracing crypto regulation more openly, especially as demand for digital assets and blockchain innovation grows.

A symbolic agreement with little real impact, given Paraguay’s current reluctance to acknowledge Bitcoin as anything more than a speculative asset.

Either way, one thing is clear—Latin America’s crypto landscape is evolving fast. Whether Paraguay jumps on board or remains hesitant, the region is proving to be a battleground for digital asset regulation.