The legislative framework and regulations of cryptocurrencies and Bitcoin in Panama are a great unknown to many. In this article we will try to shed some light on the matter.
We have been encouraged to write this article because, increasingly, we are receiving a growing number of messages from people or future clients who are interested in opening business models related to bitcoins or cryptocurrencies in Panama. In this sense, we have dedicated ourselves to research on the subject not only at the level of knowledge of what cryptocurrencies are, but also to know the vision, opinion and regularization of this type of currency in Panama. We leave you with our conclusions which, although preliminary, do help to understand the position of the banking entities internally on this issue.
Cryptocurrencies are, so to speak, the genus and, for example, bitcoins are the species. There are several types of cryptocurrencies among them:bitcoins,Ethereum,Dash, etc. So in a simple way we can understand that a cryptocurrency is a virtual currency or digital money, which only exists inside a computer.
Something must be clear, you cannot go to the bank in front of your house and get physical cryptocurrencies (here we must make a clarification, in Panama there are ATMs that allow the exchange of cryptocurrencies for dollars and vice versa, but we will talk about this later). A cryptocurrency operates in a global, decentralized, encrypted, person-to-person manner.
In Panama, the Superintendency of Banks issued in 2018 a communiqué where it warns about the use of cryptocurrencies in Panama and the risks associated with it. The press release stated the following:
"The Superintendency of Banks considers it prudent to inform the general public about the precaution and adequate advice that should be taken for the use of instruments called cryptocurrencies, of which the most widespread is the "Bitcoin" as well as others of the same category. At the same time, the Superintendency of Banks of Panama considers it appropriate to urge interested parties to learn about the risks associated with the acquisition of this type of instruments with the intention of using them, in our country, as an investment or as a means of payment.
Understanding that this is a relatively new topic, we warn that the activity of exchange, investment, buying and selling and trading in general of "Bitcoin" or any other instrument of the same category, does not have a specific regulation. In this sense, we must clarify that the activities developed through this or any other instrument of this category do not fall within the competence of this Superintendency.
Likewise, we note that the entities regulated by this Institution, to date, have not requested authorization to custody, invest, intermediate or operate with these instruments. However, as usual, the regulated parties will maintain due diligence measures to prevent the misuse of their services and platform, in accordance with the provisions of the Banking Law, Law 23 of 2015 and Agreement 10 of 2015, and other applicable regulations.
Given in the city of Panama, on the twenty-four (24) day of the month of April 2018.
The Superintendency makes it clear, by means of this communiqué, that there is no specific regulation in this respect and, most importantly, that the activities developed through this or any other instrument of this category are not under the Superintendent's jurisdiction. It emphasizes the risk they represent. However, they do not prohibit them, they let them be, they are neutral. This is an advance compared to other legislation in other parts of the world.
Panama is, so to speak, in a gray area, since it has not regulated their use, placing them in an area of illegality.
In October 2020, the National Assembly of Panama published a draft bill that establishes a first legislative framework for cryptocurrencies, we leave the official document here
Of course they do exist and operate within the Panamanian financial system, therefore, this situation has forced the Panamanian financial system to adopt certain security standards such as KYC (know your customer). These companies operate under the category of Specialized Financial Institutions (SFI), under the supervision of the Panamanian Ministry of Economy and Finance and other entities.
Among the known exchanges we can mention PandaExchange, capital of Colombian origin, which accepts deposits and withdrawals in balboas (Panama's legal tender). Another exchange house is BITPoint, of Japanese capital, provider of services in Ecuador, Argentina and Peru, which offers a wide range of cryptocurrencies. In Panama, there are also companies that offer person-to-person (P2P) services, where digital assets can be bought and sold: LocalBitcoins,Paxfull,LocalCryptos, for example.
Nothing prohibits the creation of a company whose corporate purpose is the purchase and sale of cryptocurrencies. However, we must inform that the Panamanian banks with whom we have talked about this matter tell us that any company whose activity is related to cryptocurrencies: intermediating in a cryptocurrency business, buying cryptocurrencies, sending to a place that has to do with cryptocurrencies, will not be allowed to open an account in Panama.
This is based on the fact that no bank in the local market will do so because the correspondents will not allow them to do so. In this situation, many banks have not even given us an answer to our question. This fact indicates that opening a company in Panama for this type of activity, although it is not prohibited and in fact we can do it, when we want to obtain a bank account,is not ideal since the local banks are reluctant to open bank accounts.
However, there are jurisdictions that allow more overtly the opening of bank accounts for companies whose activity is related to bitcoins or cryptocurrencies in general. If you need more information, do not hesitate to contact us.
