Panama has introduced a draft bill to regulate cryptocurrencies and establish a legal framework for blockchain-based services, aiming to position itself as a fintech leader in Latin America.
The proposed legislation recognizes cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), and stablecoins as valid payment methods for goods, services, and debt settlements.
It also outlines licensing requirements for Virtual Asset Service Providers (VASPs), including exchanges and wallets, which would be required to register with Panama’s Financial Analysis Unit (UAF).
The bill incorporates compliance measures, mandating that VASPs adhere to Know-Your-Customer (KYC) and Anti-Money Laundering (AML) regulations in line with international financial standards. Non-compliance could lead to administrative sanctions or criminal penalties.
“This legislation will provide legal clarity and ensure consumer protection while fostering innovation in the digital economy,” a government spokesperson said.
Beyond financial regulation, the draft bill promotes the use of blockchain technology in public administration.
It proposes applications such as digital identity systems and tokenized securities, which authorities say will enhance transparency and reduce inefficiencies in government services.
The legislation also formally recognizes smart contracts as legally enforceable, facilitating the creation of automated financial products and business processes. Lawmakers believe this move could attract blockchain startups and fintech firms to the country.
Panama’s efforts to regulate the crypto sector follow similar moves by other Latin American countries.
El Salvador became the first nation to adopt Bitcoin as legal tender in 2021, while Argentina has also seen growing adoption of digital assets amid economic instability.
The draft bill will undergo parliamentary discussions in the coming weeks, with industry stakeholders closely monitoring its progress.
If passed, Panama could further solidify its position as a regional hub for financial technology and blockchain innovation.
