El Salvador, Paraguay partner on digital asset regulation

El Salvador‘s digital asset watchdog has signed a ’crypto‘ regulatory agreement with Paraguay’s financial industry regulator.

The Comisión Nacional de Activos Digitales (CNAD), which regulates, licenses, and protects digital asset investors in El Salvador, signed the Memorandum of Understanding (MoU) with Paraguays Secretaría de Prevención de Lavado de Dinero o Bienes (SEPRELAD).

Announcing the MoU, SEPRELAD said the agreement focuses on facilitating mutual cooperation and information exchange between the two agencies regarding the supervision of digital assets. It will also allow for information exchange, stamping out regulatory arbitrage by virtual asset service providers (VASPs) serving both nations.

El Salvador hopes to lend its expertise in digital assets to Paraguay, a nation whose low-cost energy has been attracting block reward miners in droves in the past several years. Most recently, Canadian miner HIVE Digital (NASDAQ: HIVE) announced a $56 million acquisition of a 200 MW facility in Yguazú in Eastern Paraguay.

El Salvador, on the other hand, made BTC legal tender over three years ago in a push spearheaded by eccentric president Nayib Bukele. While initially embraced by the ‘crypto’ community, Bukeles approach of forcing businesses to accept BTC backfired and has been criticized even by staunch BTC maxis. Bukele remains unfazed and continues to rack up BTC for national reserves, but his people have rejected the digital asset.

It‘s not clear what the scope of the agreement between CNAD and SEPRELAD will be as the two nations’ approaches differ greatly: one has made BTC legal tender while the other continues to issue warnings against BTC payments. As recently as two weeks ago, the Central Bank of Paraguay reminded the public that it does not authorize digital assets.

“They are not legal tender in the country and do not have State backing. Citizens are advised to operate only with individuals and/or legal entities that conduct public offerings and are duly authorized, regulated, and supervised by this superintendency,” it said.

However, CNAD President Juan Carlos Reyes says the two nations aim to “strengthen international alliances to build a more connected and transparent future.”

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

The agreement is not new for El Salvador. Last December, the Central American nation entered a similar partnership with Comisión Nacional de Valores (CNV), Argentinas securities watchdog.

Just like with the latest MoU, the scope of the partnership was unclear. However, the two agencies said they would share knowledge and experience to promote digital asset innovation in both nations.

Argentina ranked in the top 20 nations for adoption in last years Chainalysis Global Adoption Index, trailing Brazil, Venezuela, and Mexico, respectively, in Latin America.

Bahrain exchange issues first gold-backed tokens

In the Middle East, a Bahraini exchange has completed its first issuance of tokenized assets, launching gold-backed tokens that provide ownership of the precious metal without the complexities of physical storage.

ATME, an exchange licensed by the Central Bank of Bahrain, limited its tokens to accredited investors, which is in line with Bahraini regulations that limit retail access to complicated financial instruments. The exchange only issued two tokens, each backed by one kilogram of gold; they were acquired by a single investor. The tokens can be traded on the exchanges secondary market, with the gold held securely in custody until the tokens are redeemed.

“By combining the timeless value of gold with the transformative potential of blockchain technology, we are unlocking new ways for investors to access and trade high-value assets,” commented ATME CEO Alex Lola.

“We are excited about the possibilities ahead as we plan to expand our offerings to include more asset classes on our platform.”

While ATME is the first platform to offer the product in Bahrain, tokenized gold is a fast-growing market globally. This week, Oro Labs, a startup that tokenizes gold and avails it to a diverse pool of investors, raised $1.5 million to develop its platform. Last month, Switzerlands largest bank, UBS, revealed it was testing gold tokenization under its UBS Key4 Gold, which allows even retail investors to buy and sell gold-backed tokens easily.

Globally, tokenized gold is a $1.2 billion sector, data shows. Its currently dominated by Paxos Gold and Tether Gold. However, legacy financial giants are getting more involved. Besides UBS (NASDAQ: UBS), HSBC (NASDAQ: HSBC) launched tokenized gold for retail customers in Hong Kong a year ago, while Standard Chartered has been offering custody for tokenized gold under its Zodia Markets subsidiary.