There are no blockchain nor cryptocurrency specific regulations in Panama. The Superintendence of Banks (SBP) and Superintendence of the Securities Market (SMV) have pronounced themselves in non-binding manners. In 2018, the SBP communicated that cryptocurrencies are outside its competence and that Panamanian financial institutions have not requested authorization to work with these instruments. Also in 2018, the SMV issued an Opinion confirming that: (1) cryptocurrencies are not considered securities; (2) cryptocurrencies are not currencies and therefore the exchange of cryptocurrencies is not considered as FOREX activity; (3) that a license is not required to carry out cryptocurrency-related activities; and (4) brokerage houses cannot advise or trade cryptocurrencies.
At the moment there are no judicial precedents that grant any recognition to cryptocurrencies, either as monetary instruments, securities, currencies, or digital assets.
Even though it lacks legal force, there is a draft law in the National Assembly of Panama that regulates cryptocurrencies and the forms of transaction. The draft specifically regulates the business of Cryptocurrency Exchange Houses and requires a license issued by the General Directorate of Electronic Commerce of the Ministry of Commerce. We consider this draft law far from being implemented and in need of much adjustments for an adequate regulation.
Either by means of a law from the National Assembly of Panama or administrative regulations from the SBP and/or SMV, we consider there will be a legal integration of blockchain and cryptocurrency.
Monetary Regime and Legal Tender Laws.
The Republic of Panama maintains the Balboa as a monetary unit and the US dollar is legal tender. By legal mandate the Balboa is valued in parity with US dollar and only small denomination coins are issued and circulated. At the constitutional level, the State only reserves the power to issue currency and prohibits the use of compulsory course money. Legal tender currencies are those of obligatory acceptance to cancel debts which also convertible and backed by some form of value; while compulsory course money means those of obligatory acceptance to cancel debts but not convertible into something of value.
Panama does not have a Central Bank, rather a state-owned bank called National Bank of Panama which conducts non-currency issue functions of central banks. There are no capital controls for inflow-outflow of money in Panama.
The Superintendence of Banks established that Banks cannot reject legitimate banknotes and must support the free circulation of United States dollars in Panama.
Cryptocurrency specific exchange houses are not regulated. Traditional exchange houses are regulated and subject to licensing requirements from the Superintendence of Banks. As Obligated Financial Subjects they are also subject to general compliance and AML laws and regulations.
Money Transmission and Remittance.
Cryptocurrency specific transmission or remittances services are not regulated. Traditional remittance houses are regulated and subject to licensing requirements from the Directorate of Financial Companies in the Ministry of Commerce. They are also subject to general compliance and AML laws and regulations.
Licensed banking entities are not allowed to custody or provide analogues banking services with cryptocurrency or digital assets.
Licensed broker dealers or investment advisors are not allowed to trade, advice, custody or provide analogues security services with cryptocurrency or digital assets.
There are no cryptocurrency specific tax mandates, the Directorate of General Income has not provided any kind of guidance, reporting or declaration standards for cryptocurrency related incomes.
José Agustin Preciado