Panama Proposes Comprehensive Crypto Regulation Bill

Panama has introduced a comprehensive draft bill aimed at regulating cryptocurrencies and promoting the development of blockchain-based services. This legislation is part of a broader initiative to establish Panama as a leader in financial technology within Latin America. The proposed law seeks to create a legal framework for the use of digital assets in financial transactions, establish licensing requirements for service providers, and implement strict compliance measures aligned with international financial standards.

The bill recognizes digital assets as a legal means of payment, allowing individuals and businesses to agree on their use in both commercial and civil contracts. This includes the authorization of cryptocurrencies such as Bitcoin, Ethereum, and stablecoins for purchasing goods, paying for services, and settling debts, provided that both parties consent. The legislation also establishes a regulatory framework for Virtual Asset Service Providers (VASPs), including wallets, exchanges, and custody platforms. These entities will be required to register in a national database managed by the Financial Analysis Unit (UAF) and obtain proper authorization before offering services in Panama.

The draft bill mandates compliance with Know-Your-Customer (KYC) and anti-money laundering (AML) guidelines in accordance with the recommendations of the Financial Action Task Force (FATF). Any unregistered or non-compliant entities could face administrative sanctions or criminal penalties. Beyond financial regulation, the bill encourages the use of blockchain in public administration, outlining provisions for digital identity systems and the issuance of tokenized securities. This aims to reduce bureaucratic inefficiencies and promote transparency in both the public and private sectors. The legislation also authorizes smart contracts, recognizing their legal enforceability under Panamanian law. This move is seen as an opportunity to enable innovative financial products and automate business processes through programmable agreements.

If passed, the bill would mark a significant policy shift after a previous crypto law, passed by the legislature in 2022, was partially vetoed by then-President Laurentino Cortizo. The new draft addresses concerns raised by Cortizo by clearly defining the roles of regulatory authorities, including the UAF and the Superintendency of Banks of Panama. The draft bill is expected to proceed to committee discussions in the National Assembly in the coming weeks, where it may undergo amendments before being brought to a vote.

This legislation reflects Panama's commitment to modernizing its financial infrastructure and embracing the potential of cryptocurrencies and blockchain technology. By providing a clear regulatory framework, Panama aims to attract investment, foster innovation, and promote economic growth. The proposed measures are designed to ensure consumer protection and financial stability while encouraging the widespread adoption of digital currencies. The bill's provisions for regulating blockchain-based services are expected to drive innovation and create new job opportunities, further enhancing Panama's competitiveness in the global market.