A new bill, submitted to the Panama National Assembly, regulates the use of cryptocurrencies in the country, including the use as a means of payment.
Under the new bill, proposed by Congressman Gabriel Silva of Panama, Panama will become a nation that supports the development of the digital economy, blockchain, cryptoassets and the Internet. According to the document, individuals in Panama or legal entities established in the country are free to use cryptocurrency as a means of payment for any civil or commercial transactions not prohibited by the legal system.
The bill also proposes to legitimize the payment of taxes, fees and other tax liabilities in cryptocurrency. As the author of the bill notes, the use of cryptocurrencies in Panama is not prohibited. The Panamanian Constitution does not mandate settlements in a specific currency, although the US dollar has been officially used since 1904.
“There are no specific guidelines in the fiscal rules, and we want to create them in this bill,” said Felipe Echandi, a local cryptocurrency entrepreneur who worked with Silva to draft the bill.
According to Echandi, the bill imposes a capital gains tax on cryptocurrencies like in the United States and excludes them from VAT. “We think this is a worldwide trend,” he said.
The proposed regulation also aims to establish principles for the operation of banks so that traditional financial systems are compatible with new ones. According to Silva, this will mean the ability to connect a bank account to a cryptocurrency exchange. “Today you cannot connect your bank account to PayPal,” Silva said.
As Echandi notes, the purpose of the bill is to make the use of cryptocurrency possible not only by two parties bound by a contract, but also to create conditions for mass use, for example, payment for goods and services.
In addition to regulating cryptocurrencies, the bill is also aimed at “expanding the digitalization of the state” through the use of distributed ledger technology by digitizing the identity of individuals and legal entities. The digitization process will enable the use of smart contracts and the opening of decentralized autonomous organizations in Panama.
“The country has every opportunity to become a provider of digital identity solutions for the rest of the world, as Estonia did with its e-residency program,” Echandi added.
The bill aims to strengthen the cryptocurrency ecosystem in the country and attract industry companies to Panama. In addition, if the bill is passed, issuers of securities will be able to use distributed ledger technology to tokenize assets. Silva said the ruling and opposition parties are ready to work together on the bill. The document has already been commented on by various stakeholders, including lawyers, cryptocurrency users, industry companies and government officials.
Back in June, Gabriel Silva announced that he was preparing a bill aimed at legitimizing cryptocurrencies as a means of payment and providing tax incentives to cryptocurrency firms.
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