Panama takes a step into the crypto future with a new bill: cryptocurrencies as official means of payment and new guidelines for digital financial service providers

<p> <strong> Panama takes a step into the crypto future with a new bill: cryptocurrencies as official means of payment and new guidelines for digital financial service providers </strong> </p>

Panama starts new attempt to regulate crypto

Panama takes serious steps to regulate cryptocurrencies. A new bill to regulate digital assets was presented with the aim of making the country a fintech pioneer in Latin America. The legal framework is to be created for cryptocurrencies, blockchain applications and digital financial services, whereby international standards should be observed.

The draft law will be advised in the National Assembly in the coming weeks and could form a turn to the partly blocked crypto legislation of 2022.

Bitcoin, Ethereum and StableCoins as a legal means of payment

A central point of the draft law is the recognition of digital assets as a legal means of payment. This means that private individuals and companies will have the opportunity to reconcile freely in the future, to use cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH) or stable coins in civil and commercial law contracts, be it for purchases, service payments or debt repayments.

License obligation for providers and FATF-compliant regulations

The design also provides for a clear set of rules for virtual asset service provider (vasps). Providers must register in a national database and obtain an official license at Unidad de Análisis Financiero (UAF) before they can work in Panama. Particular weight is placed on the compliance requirements of the Financial Action Task Force (FATF). In the event of violations of these requirements, administrative penalties or even criminal consequences.

Blockchain also for e-government and smart contracts

In addition to the financial world, blockchain technology will also be used in public administration. The draft law promotes digital identity solutions based on blockchain, the tokenization of securities and legally binding smart contracts. These measures are intended to help reduce bureaucracy, to automate processes and to increase transparency both in public and private sector.

The explicit recognition of smart contracts is particularly remarkable. This could make Panama one of the first countries in Latin America that introduces programmable contracts with a legal basis.

Review: Why the law of 2022 failed

The Panamaic Parliament had already passed a crypto law in 2022, but President Laurentino Cortizo took his veto. The reasons for this were a lack of regulatory clarity and constitutional concerns. The new draft takes up these criticisms and clearly emphasizes the responsibilities, in particular the role of the financial supervision UAF and the Superintendencia de Bancos de Panamá.

Panama wants to create legal certainty, promote innovation and at the same time comply with international standards. If the upcoming committee discussions and the coordination in parliament are successful, Panama could play a comparable role in the region like El Salvador, but with a stronger focus on compliance and infrastructure development.