Panama’s crypto bill hits a roadblock – President turns down the law, says it requires more work

• Panama, a known tax haven, passed a bill legalising crypto use for purchases in May. The bill would allow cryptocurrencies to be used for paying taxes, duties and more.
• Last month, Panama's President Laurentino Cortizo said that he wasn’t ready to approve the bill, citing money laundering concerns
• Cortizo has partially vetoed the bill that had proposed legalising the use of crypto.

Panama’s President, Laurentino Cortizo, has struck down a law that would have made it easier for the country’s crypto users to adopt the web3 economy. Cortizo vetoed a bill that was passed by the country’s legislative assembly last month and would have made it easier for crypto exchanges to get licences to operate in the country.

To be sure, Cortizo’s decision wouldn’t come as a surprise to industry watchers. “If I’m going to answer you right now with the information that I have, which is not enough, I will not sign that law,” Cortizo said while speaking at the Bloomberg New Economy Gateway Latin America conference last month.

According to local press, La Prensa, Cortizo struck down the law on the grounds that it “requires adaptation to the norms that regulate our financial system”. His decision sends the bill back to the country’s legislative assembly — National Assembly — and it will be discussed again.

Panama’s image as a tax haven had led many to believe that the country would be the next to adopt Bitcoin around the world, after El Salvador and the Central African Republic. But Cortizo said at the Bloomberg conference last month, “I have to be very careful if the law has clauses related to money laundering activities. Anti-money laundering activities are very important to us.”

The bill would have brought cryptocurrencies into Panama’s formal monetary ecosystem by allowing its citizens to buy goods using digital tokens. Had it been passed, it would have allowed transactions using Bitcoin, Ether, XRP (Ripple), Litecoin and Stellar for payment of taxes, fees and even duties to the government.

However, the bill wouldn’t have made digital currencies legal tender like Panama’s Latin American neighbour El Salvador’s law. It was only allowing businesses to conduct transactions using such currencies.

The country already recognized Decentralized Autonomous Organisations (DAOs) as legal entities, just like other companies. It also allows such entities to issue tokenized securities and commodities akin to gold and silver.

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