Panama, the Central American nation best known to Americans as a tax haven for the rich, is close to passing a strongly pro-crypto bill. Panama's National Assembly passed the bill by a 40-0 vote last week, and President Laurentino Cortizo is expected to sign the bill into law soon.
According to Fabriel Silva, the Panamanian politician behind the bill, the new bill "regulates the trading and use of crypto assets, the issuance of digital value, tokenization of precious metals and other assets, payment systems and other provisions."
Panama doesn't have its own currency. For the last ~100 years, Panama has used the US Dollar as its official currency. Panama has not classified crypto as legal tender – no one is required to accept it as payment.
The bill whitelists eight cryptos for use as payment between parties and paying taxes and fees to the government. The whitelisted cryptos: Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Stellar (XLM), Algorand (ALGO), Elrond (EGLD), IOTA (MIOTA), and XDC Network (XDC). It's unclear why these projects were chosen – particularly in the case of XDC Network, which has a much smaller market cap than the other projects listed.
The bill categorizes crypto as foreign-source income with no capital gains, while also making it legal for crypto firms to establish a presence in Panama. The nation has a strong infrastructure in place for helping foreign companies and individuals avoid paying taxes, so adding crypto to its financial services seems natural.
The bill also legally recognizes decentralized autonomous organizations (DAOs) and creates frameworks for Panama to tokenize its commodities via security token offerings and use the blockchain to track citizens and businesses.
Over 50% of Panamanians are unbanked, so a crypto payment option could help some of these people conduct business. Like El Salvador, Panama will release an official crypto wallet. Citizens of El Salvador have been slow to adopt crypto, and it's unclear if Panamanians were clamoring for crypto payment options. Either way, there's a clear path for Panama's financial services industry to benefit from this bill.