Panama Pushes for Blockchain Leadership with New Crypto Regulatory Bill

Panama is taking a bold step towards becoming a regional leader in fintech by introducing a comprehensive bill aimed at regulating cryptocurrencies and expanding blockchain services.

This initiative seeks to position the country at the forefront of financial technology in Latin America.

The proposed legislation establishes a legal framework for digital assets, giving them official recognition as a valid form of payment for transactions, including in business and civil agreements. Cryptocurrencies such as Bitcoin, Ethereum, and stablecoins would be accepted for purchasing goods, paying for services, and settling debts, as long as both parties involved agree.

A significant part of the bill focuses on the regulation of Virtual Asset Service Providers (VASPs), including platforms for wallets, exchanges, and custody services. These providers will need to register with Panama’s Financial Analysis Unit (UAF) and comply with stringent Know-Your-Customer (KYC) and anti-money laundering (AML) regulations. Non-compliant entities could face penalties or legal action.

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In addition to regulating digital currencies, the bill pushes for the integration of blockchain technology in governance. It supports the development of digital identity systems and the issuance of tokenized securities to increase efficiency and transparency across public and private sectors. Smart contracts would also be legally recognized, providing opportunities for automation and innovative financial solutions.

This new proposal comes after Panama’s 2022 crypto law was partially vetoed due to concerns about regulatory clarity and constitutional issues. The updated bill seeks to address these by clarifying the roles of key regulatory bodies, such as the UAF and Panama’s Superintendency of Banks.

The draft bill is set to undergo further review in the National Assembly, where it may be adjusted before a final vote. If passed, this legislation will mark a significant advancement in Panama’s push to become a hub for blockchain and crypto development.

Alexander Stefanov