Latam Insights: Paraguay’s Bitcoin Legal Tender Hack, Brazil’s Crypto Tax Updates

Paraguay’s President Peña was hacked over a bitcoin announcement, Brazil introduced new flat crypto taxes, and El Salvador experienced a significant drop in crypto remittances.

In this week’s Latam Insights, a snapshot of the latest happenings in crypto across Latin America. Paraguay made headlines as President Santiago Peña was hacked right after announcing bitcoin as legal tender, while Brazil introduced new taxes for crypto assets. Meanwhile, El Salvador saw a staggering drop in crypto remittances, illustrating the continued challenges faced by cryptocurrencies in this region.

Paraguay found itself in the spotlight on Monday after President Peña tweeted about making bitcoin legal tender, which left many confused. The now-removed tweet claimed that a law had been signed, backed by a supposed $5 million bitcoin reserve. It was filled with grandiose phrases like an “unbreakable compromise” to promote economic innovation, yet prompted skepticism among observers who suspected it could be a hack given its odd tone. The plan also strangely involved asking investors to send funds to a specified bitcoin address, raising eyebrows even further.

In Brazil, the government announced a shake-up in its crypto taxation policies. Effective from a recent Provisional Measure, the country is moving towards a flat rate of 17.5% income tax on all crypto-related gains, eliminating previous exemptions. Previously, only profits exceeding certain amounts faced taxation, creating flexibility that many took advantage of. Now, all income from crypto transactions will face the same rate, leaving no thresholds untouched.

Over in El Salvador, things aren’t looking too rosy for the cryptocurrency transfer market. Reports show that crypto remittances dropped by a sharp 44.5% in the first quarter of 2025 compared to the same span last year. The country only managed to pull in a mere $16 million in crypto remittances, a steep fall from the previous year’s $28.83 million. Old-school financial institutions still seem to be the go-to option for most Salvadorans, despite higher fees.

In other significant developments, Ripple and the SEC are trying to negotiate the resolution of their long-standing lawsuit concerning the cryptocurrency XRP. Both parties submitted a joint motion, looking for a judge’s approval to lift an injunction that would release over $125 million held in escrow. If granted, it could end a solid two-and-a-half years of legal battles, which have broadly focused on whether XRP was sold as an unregistered security.

The submission emphasized that resolving this dispute would prevent prolonged litigation while promoting efficiency in the courts. Ripple has faced intense scrutiny since this lawsuit began dating back to December 2020, making this court case crucial for shaping the future regulatory landscape for crypto assets in the United States. As of now, whether Judge Analisa Torres will grant this indicative ruling remains to be seen.

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In this week’s recap, Paraguay’s surprise bitcoin legal tender announcement turned out to be a confusing hack, while Brazil ramps up its crypto tax laws to impose a flat income tax across the board. Moreover, El Salvador’s crypto remittances took a serious hit, indicating persistent reluctance among Salvadorans to embrace these digital currencies. Lastly, Ripple’s ongoing saga with the SEC might be nearing a resolution that could provide greater clarity on cryptocurrency regulations moving forward.

Original Source: news.bitcoin.com