Panama’s Crypto Compliance Conundrum
Panama’s National Assembly has approved a bill allowing private and public use of crypto assets, but President Laurentino Cortizo has refused to sign the bill until tougher Anti-Money Laundering (AML) measures are added.
Simplifying Transactions for Panamanian Citizens
The Crypto Asset Law aims to simplify transactions for Panamanian citizens, half of whom don’t have bank accounts. If passed, people in Panama will be able to create crypto wallets and pay with virtual assets more easily. The law also creates favorable conditions for international businesses, positioning Panama as a hub for innovation and technology in Latin America.
Permitted Crypto Assets
The bill allows the use of various crypto assets, including:
- NFTs
- Bitcoin
- Ethereum
- Litecoin
- Stellar
- XRP
- XDC Network
- IOTA
- Algorand
- Elrond
It also enables the tokenization of precious metals, payment systems, and provisions.
Ensuring Safe Use
To ensure safe use of crypto assets, Panama plans to create a special digital wallet that allows citizens to use them safely. Citizens will be able to use crypto assets to pay taxes, fees, and other financial obligations, leading to “faster, more efficient, and transparent processes” within the country.
Concerns Over AML
However, there are concerns over limited transaction traceability and the potential for illegal activities. The bill’s opponents argue that the lack of AML controls could lead to money laundering and other financial crimes.
Mixed Opinions
Sumsub’s Chief Legal Officer, Tony Petrov, believes that Panama’s new crypto law has both benefits and risks. “I think that all Latin American countries are in a good position as regards adoption of cryptocurrencies as an alternate payment method… but it is extremely important to realize that the adoption of the Crypto Law for Panama is only the beginning of a very long journey where success is not guaranteed.”
Debate Over Risks and Benefits
The bill’s approval has sparked debate over the potential risks and benefits of adopting cryptocurrency. While it could attract more foreign investors and create new job opportunities, it also raises concerns about limited transaction traceability and the potential for illegal activities.
Future Outlook
As Panama works to amend the bill to address AML concerns, it remains to be seen whether the country will ultimately adopt a crypto-friendly law that balances innovation with financial stability.