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Panamanian Congressman Presents Bill to Regulate Crypto
Gabriel Silva drafted legislation proposing the use of cryptocurrency as a means of payment for civil and commercial operations.
Updated May 11, 2023, 3:43 p.m. Published Sep 8, 2021, 8:28 p.m.
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Panama has introduced a bill to regulate the use of cryptocurrencies throughout the country.
The bill, presented by Congressman Gabriel Silva on Tuesday night, seeks to make Panama a “country compatible with the digital economy, blockchain, crypto assets and the internet.”
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The text proposes that individuals in Panama or legal entities established in the country may freely agree to use cryptocurrency as a means of payment for any civil or commercial operation not prohibited by the legal system.
The project also proposes that taxes, fees and other tax obligations may be paid using cryptocurrency.
Hoy presentamos la Ley de Cripto. Buscamos hacer a Panamá un país compatible con el blockchain, los criptoactivos y el internet.
— Gabriel Silva (@gabrielsilva8_7) September 6, 2021
Esto tiene el potencial de crear miles de empleos, atraer inversión y transparentar el gobierno
Pueden ver el proyecto aquí: https://t.co/6FoKdwbkwR pic.twitter.com/xDxfyS9BYI
As Silva confirmed to CoinDesk, the use of cryptocurrencies is not illegal in Panama. There is no enforced currency in the Panamanian constitution, although the U.S. dollar has been used officially since 1904, when a monetary agreement between the countries known as Taft-Arias took effect.
“There are no certainties in the fiscal rules, and with this project we seek to bring them”, said Felipe Echandi, a local crypto entrepreneur who worked with Silva in the drafting of the bill.
According to Echandi, the bill subjects cryptocurrencies to the capital gains regime, as in the United States, and excludes them from value added tax (VAT). “We believe this is a worldwide trend,” he said.
The proposed legislation also seeks to establish principles of banking interoperability so that traditional financial systems are compatible with new ones. In Silva’s words, that would mean the possibility of connecting a bank account with an exchange.
“Today you can’t even connect a bank account with PayPal,” Silva said.
According to Echandi, the objective of the bill is for crypto to be used by two parties that have a contract as well as create conditions to broaden crypto use, such as in a local store.
In addition to the regulation of cryptocurrencies, the project also seeks to “expand the digitalization of the state” through the use of distributed ledger technology by digitizing the identity of individuals and legal entities, according to a draft of the bill.
The digitization process will allow Panama to be compatible with smart contracts and DAOs (decentralized autonomous organizations), the bill reads. “The country has all the potential to be a digital identity provider for the rest of the world as Estonia has done with its digital residency program,” it adds.
“The most futuristic vision is that Panama has to become a DAO,” said Echandi, who added that the bill is an intermediate step toward that vision.
According to Echandi, the bill seeks to strengthen the crypto ecosystem in the country and promote the arrival of crypto companies to the country.
“While it is not currently illegal to acquire or buy cryptocurrencies, there are not numerous exchanges or platforms to convert from fiat to crypto or vice versa,” he added.
In addition, the proposed legislation allows issuers of securities to use distributed ledger technology, blockchain, or cryptocurrencies to represent those releases.
Just as Panama has become a financial hub in recent years, with this bill the country could become a desirable jurisdiction for companies seeking to issue any type of asset, Echandi said.
Silva – a member of Bancada Independiente, an independent and opposition party – said that both the ruling and opposition benches are willing to deal with the bill. In the last two months, he met with different public institutions that would be involved in the operation of crypto, such as the Ministry of Finance, the National Bank and the Superintendency of Banks, he added.
The project gathered comments from different parties, including lawyers, bitcoin users, crypto-related companies and government officials, Silva said.
Silva confirmed to CoinDesk in June that he was going to introduce the bill in July, although it was delayed by the collection of comments from different parties, he added.
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- Witt expressed confidence that despite these delays, the legislation will eventually be reconciled and brought to the Senate floor.
Reading Between the Lines: Stablecoins are acting as a "gateway drug" for global business leaders who are beginning to grasp the technology's potential—and its threat.
- Witt observed a cycle where traditional players move from a lack of understanding to fear, and finally to incorporating crypto into their own product offerings.
- While some Senate Republicans worry about stablecoins causing deposit flight from community banks, Witt believes a "smooth glide path" into these future technologies is possible with patience and cooperation.
- “Consumers win when there’s choice,” he said, while also acknowledging concerns from Senate Republicans about community banks and financial stability. The administration, he suggested, sees convergence between crypto and traditional finance as inevitable but wants the transition to be smooth rather than destabilizing to all parties.
- U.S. regulators intend to lead the global regulatory conversation, even if the domestic legislative process results in imperfect "directionally accurate" rules.
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- Witt suggested there is still a window of opportunity to pass additional digital asset legislation this year before midterms dominate the congressional calendar.
- The administration is also monitoring "developing situations" regarding digital assets potentially seized in national security actions abroad, such as in Venezuela.
- Finally, Witt declined to specifically comment on speculation that Venezuelan enforcement actions may have involved seized digital assets, citing national security sensitivities and an evolving situation, but did add, “There’s a number of folks in the national security apparatus engaged,” in regards to how the Maduro regime was financed.
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