Legislative Landscape for Cryptocurrencies in Panama Prior to 2024

The legislative environment for cryptocurrencies in Panama up to 2024 was marked by a gradual shift towards regulation, amidst a broader landscape of legal acceptance without specific governmental oversight. This period witnessed significant developments, particularly in 2022, reflecting Panama’s evolving stance on digital currencies.

Legal Status and Lack of Specific Legislation

Until 2022, cryptocurrencies, including major ones like Bitcoin, Ethereum, and Litecoin, were legal in Panama. The country did not have specific laws prohibiting the use of cryptocurrencies. However, it’s crucial to note that the Panamanian government did not officially recognize these digital currencies as legal tender, meaning they did not replace the Panamanian Balboa or the US Dollar in official capacities​

​General Financial Regulations Applicable to Cryptocurrencies

Even though there were no specific laws or penalties directly targeting cryptocurrency use, users in Panama had to adhere to general financial regulations. These encompassed laws related to fraud, money laundering, and tax evasion. Violations involving cryptocurrencies were subject to the same significant penalties as those involving traditional currency, demonstrating the government’s intent to maintain financial integrity irrespective of the medium​

The Introduction of the Crypto Law Bill

In September 2021, a notable development occurred when Panamanian Congressman Gabriel Silva introduced the “Crypto Law: Making Panama Compatible with the Digital Economy, Blockchain, Crypto Assets, and the Internet.” This bill aimed to establish a comprehensive legal, regulatory, and fiscal framework for the use of cryptocurrencies in Panama, marking a significant step towards formalizing the country’s approach to the digital economy​

Legalization of Cryptocurrency Trading

Trading cryptocurrencies was legal in Panama, and the country hosted several cryptocurrency exchanges. These platforms facilitated the buying, selling, and trading of various cryptocurrencies. Like the usage of cryptocurrencies, trading activities were not subject to any specific regulations or laws, indicating a relatively open market environment for digital currency exchanges​

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The Passage of Bill No. 697 in 2022

A critical legislative development occurred on April 28, 2022, when Panama’s National Assembly passed Bill No. 697, regulating the commercialization and use of crypto assets. The bill allowed individuals and companies in Panama to use crypto assets as payment for commercial transactions permitted under Panamanian law. The bill specified that this included cryptocurrencies such as Bitcoin, Ethereum, XRP, and several others.

The bill also outlined the role of Panama’s Government Innovation Authority in considering the use of blockchain technologies for public registries to promote transparency. Furthermore, the government was empowered to offer digital wallets for secure payments and crypto asset exchanges. Companies providing services involving crypto assets were required to obtain a license and adhere to Panama’s anti-money laundering and terrorism financing laws​

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Presidential Approval and Future Regulations

For Bill No. 697 to become law, it required the signature of the President of Panama. Upon presidential approval, relevant regulations were expected to be issued later in 2022, marking a significant stride in Panama’s regulatory approach to cryptocurrencies​

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In summary, prior to 2024, Panama’s legislative landscape for cryptocurrencies was characterized by a legal tolerance of digital currencies, absence of specific crypto-focused regulations, and a progressive shift towards a more structured regulatory framework. The passage of Bill No. 697 in 2022 was a pivotal moment, indicating Panama’s commitment to integrating cryptocurrencies into its legal and economic systems while ensuring proper oversight and consumer protection.