Panama Considers Legislation for Cryptocurrency Assets
Panama Embraces Comprehensive Crypto Regulation
Panama has taken a significant step towards embracing cryptocurrencies with the passage of a new law that allows private and public use of crypto assets. The bill, which was passed by the National Assembly on April 28, 2022, with 38 votes in favour and none against, aims to establish a robust regulatory framework for digital assets [1].
The new law, known as Bill No. 247, focuses on creating a comprehensive regulatory framework aligned with international standards such as the Financial Action Task Force (FATF) 40 recommendations. It mandates licensing for Virtual Asset Service Providers (VASPs) and requires strict implementation of Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance protocols consistent with global best practices [1].
The bill also proposes establishing a National Council for Digital Assets to oversee digital economy growth and ensure responsible innovation, including effective AML oversight [1]. Key AML features under Bill No. 247 include licensing of crypto service providers with mandatory KYC/AML procedures, compliance with FATF standards, and institutional oversight via the National Council for Digital Assets [1].
To maintain transparency and minimize risks like account blocking, crypto businesses in Panama are advised to conduct regular internal audits and maintain detailed AML/KYC documentation tailored for banking and regulatory compliance [3][4].
The new law permits the use of a wide range of crypto assets, including Bitcoin, Ethereum, Litecoin, Stellar, XRP, XDC Network, IOTA, Algorand, and Elrond, for transactions [2]. It also allows citizens without bank accounts to use digital wallets for their transactions [5].
In a move to attract more foreign investors, the new regulation also aims to enable the tokenization of precious metals, payment systems, and provisions [7]. Moreover, citizens will be able to use crypto assets to pay taxes, fees, and other financial obligations [8].
However, the bill has not been signed by President Laurentino Cortizo due to concerns over FATF penalties against Panama and the need for tougher AML measures [6]. Tony Petrov, the Chief Legal Officer of Sumsub, believes that Latin American countries are in a good position to adopt cryptocurrencies as an alternate payment method due to their traditionally vulnerable financial systems [9].
The new law could potentially create job opportunities in Panama, as it plans to create a special digital wallet for citizens to use crypto safely [6]. Banks in Panama will also be able to adapt crypto assets to their systems, allowing more citizens to get banked [7]. The bill was written in accordance with other Panamanian laws to prevent monopolization in crypto [7].
In summary, Panama’s AML approach for crypto is evolving into a structured framework emphasizing licensing, KYC verification, adherence to FATF guidelines, and robust institutional supervision to foster a trustworthy and innovation-friendly crypto environment [1][3][4]. While the bill has not been signed yet, its passage marks a significant step towards integrating cryptocurrencies into Panama's economy.
References: [1] Cointelegraph. (2022, May 4). Panama passes bill to allow private and public use of crypto assets. Retrieved from https://cointelegraph.com/news/panama-passes-bill-to-allow-private-and-public-use-of-crypto-assets [2] Cointelegraph. (2022, May 4). Panama passes bill to allow private and public use of crypto assets. Retrieved from https://cointelegraph.com/news/panama-passes-bill-to-allow-private-and-public-use-of-crypto-assets [3] Cointelegraph. (2022, April 29). Panama's crypto bill aims for strict AML controls, internal audits, and KYC procedures. Retrieved from https://cointelegraph.com/news/panama-s-crypto-bill-aims-for-strict-aml-controls-internal-audits-and-kyc-procedures [4] Cointelegraph. (2022, May 4). Panama passes bill to allow private and public use of crypto assets. Retrieved from https://cointelegraph.com/news/panama-passes-bill-to-allow-private-and-public-use-of-crypto-assets [5] Cointelegraph. (2022, May 4). Panama passes bill to allow private and public use of crypto assets. Retrieved from https://cointelegraph.com/news/panama-passes-bill-to-allow-private-and-public-use-of-crypto-assets [6] Cointelegraph. (2022, May 4). Panama passes bill to allow private and public use of crypto assets. Retrieved from https://cointelegraph.com/news/panama-passes-bill-to-allow-private-and-public-use-of-crypto-assets [7] Cointelegraph. (2022, May 4). Panama passes bill to allow private and public use of crypto assets. Retrieved from https://cointelegraph.com/news/panama-passes-bill-to-allow-private-and-public-use-of-crypto-assets [8] Cointelegraph. (2022, May 4). Panama passes bill to allow private and public use of crypto assets. Retrieved from https://cointelegraph.com/news/panama-passes-bill-to-allow-private-and-public-use-of-crypto-assets [9] Cointelegraph. (2022, May 4). Panama passes bill to allow private and public use of crypto assets. Retrieved from https://cointelegraph.com/news/panama-passes-bill-to-allow-private-and-public-use-of-crypto-assets
In the context of Panama's comprehensive crypto regulation, businesses operating within the digital asset sector will be expected to implement Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures, thereby ensuring compliance with global best practices and the Financial Action Task Force (FATF) standards. The new law also emphasizes the importance of technology in the form of a robust regulatory framework for digital assets. This technology-driven approach is a significant step towards integrating finance and business by enabling the tokenization of various assets, including precious metals and payment systems.
