Panama’s Crypto Law: what scenarios are open to invest in cryptocurrencies?

Quijano & Associates has seen fit to launch a Business Unit dedicated to advising on Cryptoassets and Blockchain projects.

President Laurentino Cortizo’s veto of the bill that regulates cryptoassets in Panama, in June, and the launch of a Visa card for cryptocurrency payments by Towerbank, in July, show the crypto panorama in the making.

For Gonzalo Fábrega, an associate at Quijano & Associates, the interest of users in taking this market as a means of investment is perceived to be on the rise since the current post-pandemic economic scenario. In conversation with LexLatin, Fábrega states to observe this change on the crypto ecosystem in the number of queries that come to the firm on how to incorporate a cryptocurrency or NFT issuing corporation in Panama. The lawyer shares his guidelines and main recommendations:

“For the time being, as coin-issuing entities or NFTs are not regulated in Panama, the companies can be incorporated as any other. That is, the articles of incorporation are created and signed and filed with the Public Registry for registration. Once registered, the company is considered incorporated and can carry out any legal activity in the country. Now, since there is currently no regulatory framework regarding cryptocurrencies, our recommendation is to avoid indicating that the entity is authorized to issue coins, NFT or other activities related to cryptocurrencies since, at the moment, there is no permit issued for such activities”.

In addition to the incorporation of corporations, there is also interest in the exchange market. The capital market specialist sees in such interest an opening to diversify investments and consumption options.

“After the pandemic, particularly after the great progress made by Bill 697 or Crypto Law, several fintechs, cryptoasset exchanges and other companies issuing and capturing funds and cryptocurrencies have been attracted to Panama. So a scenario is being created in which new investments are being encouraged and diversifying the options available to the consumer”.

In the middle of this context, Quijano & Associates has seen fit to launch a Business Unit dedicated to advising on Cryptoassets and Blockchain projects. The team that articulates it is integrated by a lead partner, Oliver Muñoz, specialist in capital markets and M&A, and three associates, Gonzalo Fábrega, Natalia De Obaldía and Valerie Barrios.

Expectations for the Law and other trends
According to Gonzalo Fábrega, having a regulation on this matter will be a great contribution to the development and growth of the sector. For the lawyer, the content of the bill is a good first symptom of the integration of cryptos into everyday life. Fábrega highlights article 8 referring to the payment of taxes, fees and other tax obligations in bitcoin or other cryptos and points out which, in his experience, should be the entity responsible for the regulation.

“Article 8 of this Law, is the first step towards the inclusion of the use of cryptocurrencies as a massive payment method in the Panamanian citizenship. The payment of our taxes, fees and other tax obligations is a duty that all Panamanians have. If the law were to be approved by the Executive Branch, it would be interesting to see how its regulation will provide for making these payments. As for the regulating entity, a specialized unit of the Superintendence of Banks should be in charge, since this is the entity in charge of supervising all financial entities in Panama”.

Consultado sobre las tendencias que avizora en materia de cripto y blockchain en Panamá, hacia el 2023, el abogado destaca un sostenido involucramiento del sector corporativo, especialmente Fintech y una búsqueda, cada vez mayor, de abogadas y abogados por especializarse en la materia. 

“Las tendencias apuntan a un incremento de la participación del sector empresarial y financiero, conforme hay cada vez más y más empresas que empiezan a adoptar las criptomonedas como método de pago, particularmente las fintech. Por el momento, incluso a falta de un marco regulatorio, es notorio el interés del mercado extranjero por establecer ‘compañías cripto’ en el país. Desde el punto de vista de la profesión, también se ve un gran incremento en el número de abogados que buscarán especializarse en la materia”.

The original interview was conducted in Spanish, and may be read in Lex Latin’s website: https://lexlatin.com/entrevistas/ley-cripto-de-panama-que-escenarios-se-abren-para-invertir-en-criptoactivos