Panama on the Brink of Becoming Third Country to Equate Crypto with Fiat Asset
The National Assembly of Panama has passed a bill allowing private and public use of crypto assets, bringing the country closer to becoming the third nation to equate cryptocurrencies with traditional fiat currencies.
Simplifying Transactions for Panamanian Citizens
The bill was approved by 38 members of the assembly with no votes against. However, before it can come into force, it needs to be signed by President Laurentino Cortizo. The President has expressed concerns about the lack of Anti-Money Laundering (AML) measures in the bill and has refused to sign it until they are added.
Favorable Conditions for International Businesses
The new law aims to create favorable conditions for international businesses and help Panama become “the hub of innovation and technology in Latin America,” according to Congressman Gabriel Silva. Under the proposed regulations, various crypto assets such as:
- Bitcoin
- Ethereum
- Litecoin
- Stellar
- XRP
- XDC Network
- IOTA
- Algorand
- Elrond
will be permitted for transactions.
Tokenization and Digital Wallets
The bill will also enable the tokenization of precious metals, payment systems, and provisions, allowing citizens to use digital formats. Additionally, a special digital wallet will be created that will allow citizens to use crypto safely and pay taxes, fees, and other financial obligations.
Concerns about Transaction Traceability and Illegal Activities
However, there are concerns about limited transaction traceability and the potential use of crypto for illegal purposes. According to Sumsub’s Chief Legal Officer Tony Petrov, it is crucial that Panama maintains effective AML compliance procedures and financial controls to avoid being used as a shell structure for transnational financial crime.
Potential Benefits and Risks
Despite the risks, the bill has been praised for its potential benefits, including attracting foreign investors and creating new job opportunities. The regulation also aims to bring more citizens without bank accounts into the formal economy by allowing them to use digital wallets for transactions.
As Panama moves forward with implementing the Crypto Asset Law, experts believe that it will be crucial to strike a balance between innovation and financial stability to avoid the pitfalls faced by other countries that have adopted similar regulations.