Panama approves Crypto Law in Third Debate
The Panama National Assembly approved in the third debate the Law regulating the marketing and use of crypto assets, the issuance of digital value, the tokenization of precious metals and other goods, payment systems and other provisions
This Law aims to make the Republic of Panama compatible with the digital economy, blockchain, crypto assets, the tokenization of precious metals and other goods, and the internet, for the benefit of its inhabitants and the rest of the world, as well as the provisions of protection, surveillance, inspection, and control over such activities.
This Law aims to carry out the following:
The inclusion of blockchain technology in the digital agenda of the Republic of Panama
The Government Innovation Authority (AIG) will evaluate implementing the following:
- The digitization of the identity of natural and legal persons using distributed ledger technology or blockchain.
- Migrate public records and digitize resolutions and administrative acts using digital signature and distributed ledger technology or blockchain.
- Give practical validity, modify, and propose regulatory modifications for the adoption of smart contracts or autonomous decentralized organizations.
- Ensure universal access to the internet for all inhabitants of the Republic of Panama.
The use of crypto assets as a means of payment
Natural persons located in the Republic of Panama, branches registered in the Republic of Panama and legal entities organized in the Republic of Panama may freely agree to the use of crypto assets of any kind, as a means of payment for any lawful civil or commercial operation.
Likewise, the possibility of paying taxes, fees, and other tax obligations with crypto assets in the Republic of Panama is established.
The use of crypto assets to represent securities and other assets
Issuers of securities may use distributed ledger technology, blockchain or crypto assets and issue Security Tokens (STO) to represent redeemable securities and any other goods in full functional equivalence with any other form of issuance or representation of such securities or assets. This process will be defined and developed within a regulation created by the Superintendency of Securities Market.
Issuers of redeemable digital value as financial obligated subjects
Issuers of redeemable digital value will be considered financial obligated subjects under Law 23 of 2015. Therefore, such issuers must comply with due diligence measures and all mechanisms for the prevention of money laundering, financing of terrorism and financing of the proliferation of weapons of mass destruction. This will be supervised by the Superintendency of Banks as supervisor of financial obligated subjects.
Regulation and oversight of digitally redeemable value entities
The General Directorate of Financial Companies of the Ministry of Commerce and Industry (MICI) will have the objectives of supervising, regulating, and monitoring the entities of redeemable value and must regulate their control within a maximum period of three (3) months counted from the entry into force of this Law. The General Directorate of Financial Companies will oversee receiving applications and granting registration or license, as appropriate for entities of redeemable digital value.
Obligations of redeemable digital value entities
Any natural or legal person who habitually engages in issuing redeemable digital value to third parties must obtain a redimible digital value entity license issued by the MICI. Such entities shall have the obligation to safeguard funds received in exchange for redeemable digital value either in safe and liquid bank accounts or investments or through insurance and bonds. Safeguarded funds, fungible crypto-assets and physical assets shall be deemed to be held in a fiduciary capacity by the issuer of redeemable digital value in the name and for the benefit of one or more of its clients.
The issuance of redeemable digital value by the Republic of Panama
The Republic of Panama, through its organs and entities, may venture into the activity of issuing redeemable digital value by obtaining the corresponding license, or by hiring a supplier for that purpose that has such a license.
