in Crypto News
Panama’s national assembly has approved a bill that gives Bitcoin and eight other cryptocurrencies legal status in the Central American country.
The bill was approved unanimously last week and now goes forward for signing by Panamanian President, Laurentino Cortizo. Alongside Bitcoin, the bill green-lights the use ‘without limitation’ of eight other cryptocurrencies - Ethereum, XRP, Litecoin, XDC, Elrond, Stellar, IOTA and Algorand.
Legalized But Not ‘Legal Tender’
With this legislation in place, Panamanians will be able to use any of these crypto assets as a means of payment in the country. It’s important to note that unlike the Bitcoin law introduced last year in El Salvador, this law does not make any of these cryptocurrencies legal tender in Panama. Legal tender status would require entities in the country to accept a currency. Forcible legal tender would be much more tricky to achieve as it would require an amendment to the Panamanian constitution. Instead, it makes their use legal for those who choose to use them.
Aside from providing legal clarity relative to cryptocurrencies in the country, this development has a number of broader implications. The legislation also covers matters related to the trading and use of crypto assets, tokenization of precious metals, issuance of digital securities and new payment systems. It includes formal recognition of decentralized autonomous organizations (DAOs) and security token offerings (STOs). The promoter of the bill, Panamanian lawmaker Gabriel Silva, took to Twitter to highlight the main objective of the law, stating: “This will help Panama to become a hub of innovation and technology in Latin America”.
From the point of view of taxation, the country’s territorial tax system will be extended to these digital assets - making investments in them free from capital gains tax. Silva claimed that 50% of Panamanians were unbanked and that this new law would be key in facilitating their access to a new financial system.
Jose Fabrega of crypto investment hub CryptoSPA, speculated that the legislative change could provide clarity to help make Panamanian banks more cooperative with regard to cryptocurrency than they have been in the past.
The new law is not without detractors. Panama has long been seen as a tax haven which has come under increasing international pressure and scrutiny in the wake of the Panama Papers scandal. In light of the announcement of the law, Romain Dromard, CEO of investment advisory firm, K&B Family Office, stated: “Panama was already in a bad position and these payment methods skip the due diligence processes that international organizations are asking Panama to embrace”.
Patrick Cannon of UK legal firm Cannon Chambers told Fortune that the new law was likely to appeal to “all sorts of fraudsters” due to an ability to trade cryptocurrencies anonymously. Cannon also claimed that the move would undermine the British stance of not recognizing cryptocurrencies as official currencies. This claim was later challenged on Twitter as being inaccurate given that Panama has not made any of the nine cryptocurrencies implicated legal tender in the country.
The British stance towards cryptocurrencies also seems set to change this year, following a government announcement that the UK will become one of the world’s leading crypto hubs.
This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.