Panama, a strategic financial hub in Latin America, is forging ahead with groundbreaking cryptocurrency legislation that could transform its economic landscape. On April 28, 2022, the National Assembly passed an extensive crypto bill designed to legitimize digital currencies as legal methods of payment while streamlining transactions, including tax payments.
Unlike El Salvador’s approach, which mandated cryptocurrency acceptance, Panama‘s legislation offers flexibility, allowing businesses to choose whether they will accept digital currencies for civil and commercial purposes.
Panama embraces a voluntary crypto adoption model, empowering businesses with payment choice rather than imposing mandatory acceptance.
The bill encompasses multiple cryptocurrencies beyond Bitcoin, including Ethereum, and introduces provisions for tokenized assets, payment systems, and the recognition of Decentralized Autonomous Organizations (DAOs). This legislation aims to position Panama as an attractive innovation center in the region, potentially creating thousands of jobs and drawing substantial international investment.
The framework also addresses financial inclusion, offering banking alternatives to underserved populations through cryptocurrency adoption.
Central to the bill’s implementation is a robust regulatory framework that incorporates strict anti-money laundering measures aligned with Financial Action Task Force (FATF) recommendations. Service providers will need to obtain licenses to operate legally within Panama, ensuring compliance with international financial standards.
This regulatory approach represents Panama’s commitment to preventing illicit activities while embracing technological advancement.
President Laurentino Cortizo’s approval remains a critical hurdle for the legislation’s enactment, as he has expressed concerns regarding adequate anti-money laundering provisions. The President’s cautious stance reflects Panama’s complicated history with financial transparency and recent FATF scrutiny, which influences the final decision-making process regarding the bill’s implementation.
If enacted, this legislation would distinguish Panama’s approach from countries like El Salvador and the Central African Republic, which have adopted Bitcoin as legal tender with differing frameworks.
Panama’s extensive legislation emphasizes choice in payment methods while promoting the use of distributed ledger technology in government operations, smart contracts, and new organizational forms, potentially establishing the country as a pioneer in regulated cryptocurrency adoption within Latin America. The bill proposes to migrate public records to blockchain systems for increased efficiency and transparency in government operations. The government plans to develop a unique digital wallet that will enable users to safely conduct crypto transactions and make payments for various financial obligations. Unlike the 24/7 operation of DeFi platforms, Panama’s regulated CeFi approach would maintain traditional banking hours for certain services.
