Crypto Overview in Panama

Regulatory data is for informational purposes only and may not reflect the most current legal developments. Always consult qualified professionals before making decisions.

Legal Classification and Regulatory Framework

Cryptocurrency Status

Cryptocurrencies are legal in Panama but operate without a comprehensive regulatory framework. The Panamanian Constitution permits individuals to engage in activities not explicitly prohibited by law (Article 18), and Article 262 establishes monetary freedom, allowing cryptocurrencies to circulate by mutual agreement without formal legal tender status. Virtual assets fall under the broad movable property classification under the Civil Code but lack a specific regulatory definition.

In 2018, the Superintendencia del Mercado de Valores (SMV, Superintendency of the Securities Market) stated in Opinion 7 that cryptocurrencies are not recognized as securities or currencies under current regulations, while the Superintendencia de Bancos de Panama (SBP, Superintendency of Banks) confirmed that crypto activities fall outside its competence. The SMV reinforced this in Opinion No. 04-25 (August 2025), explicitly prohibiting licensed brokerages from engaging in crypto investment or custody on behalf of clients and acknowledging the legal framework is outdated.

Bill 697, passed by the National Assembly in April 2022, was partially vetoed by President Laurentino Cortizo in June 2022 over AML concerns, then referred to the Supreme Court in January 2023. On July 14, 2023, the court declared it entirely unconstitutional on procedural grounds, resetting Panama’s legislative efforts. Two successor bills, Bill 247 and Bill 326, were introduced in 2025 under President Jose Raul Mulino (took office July 2024); neither has been enacted.

Tax Treatment

Panama’s territorial tax system is the defining factor for crypto taxation. Under the Fiscal Code, only income generated within Panama’s borders is subject to taxation. Crypto gains from trading on international exchanges or from assets whose value appreciation occurs outside Panama are classified as foreign-source income and are exempt from Panamanian tax. There is no separate capital gains tax on crypto, no VAT on crypto transactions, and no withholding tax on dividends from foreign-source crypto income.

The standard corporate income tax rate is 25% on Panama-sourced income, which could apply to domestic crypto business revenue, though the Direccion General de Ingresos (DGI) has issued no specific guidance on cryptocurrency taxation. On December 2, 2025, Panama signed the OECD Crypto-Asset Reporting Framework Multilateral Competent Authority Agreement (CARF-MCAA), committing to the automatic exchange of crypto transaction data with partner tax authorities, with reporting expected to begin in 2027.

Regulatory Oversight

Panama has no single dedicated crypto regulator. The SMV oversees traditional securities markets and has confirmed it has no authority over digital assets absent a specific legal mandate. The SBP supervises banking sector AML compliance and expects due diligence from regulated entities handling crypto transactions. The Unidad de Analisis Financiero (UAF, Financial Analysis Unit) is the primary AML/CFT body for crypto businesses, collecting and analyzing suspicious transaction reports under Law 23 of April 27, 2015. The Superintendencia de Sujetos No Financieros (SSNF, Superintendency of Non-Financial Entities) supervises AML/CFT compliance for non-financial entities and administers the beneficial ownership registry established by Law 129 of 2020. The Ministerio de Comercio e Industrias (MICI, Ministry of Commerce and Industries) handles corporate registration and commercial operating permits.

Business Environment

Banking Relationships

Banking access for crypto businesses in Panama has historically been challenging due to the country’s reliance on U.S. correspondent banks, which have applied de-risking pressure against crypto-related clients. Most traditional banks remain cautious toward crypto companies. Towerbank International has emerged as Panama’s primary crypto-friendly banking institution, launching a hybrid crypto-fiat platform called ikigii that allows clients to buy, sell, send, and receive Bitcoin, Ethereum, USDC, and USDT with instant conversion to dollars. Towerbank also serves as the intermediary for Panama City’s municipal crypto payment acceptance, converting crypto to USD on the spot to ensure compliance with regulations requiring public institutions to receive funds in dollars.

Many crypto businesses use international electronic money institution providers as settlement partners. Bank account opening typically requires source of funds documentation, a business plan, AML/KYC policies, and a live website. Panama’s removal from the FATF grey list (October 2023) and the EU high-risk list (July 9, 2025) has materially improved the correspondent banking environment, reducing enhanced due diligence requirements from European financial institutions.

Innovation Support

Panama Blockchain Week 2025, held in April with the participation of President Jose Raul Mulino, drew more than 3,000 international visitors. In April 2025, Panama City Council voted to accept Bitcoin, Ether, USDC, and USDT for municipal taxes, fees, parking tickets, and permits, becoming the first public institution in Panama to accept crypto payments. Mayor Mayer Mizrachi’s solution required no new national legislation: Towerbank converts crypto to dollars at the point of payment, satisfying existing dollar-denominated revenue requirements.

Panama’s free trade zones support technology and crypto businesses. Ciudad del Saber (City of Knowledge) offers tax incentives and immigration benefits for technology companies. Panama Pacifico provides income tax exemptions into the 2040s for qualifying software and technology firms. The country’s dollarized economy eliminates currency conversion risk.

Crypto License in Panama

Panama does not operate a dedicated VASP licensing regime. No standalone crypto license exists under current law. Virtual asset businesses establish legal presence through company incorporation, commercial licensing, and mandatory AML/CFT registration, a de facto framework that has remained in place while successive comprehensive bills have failed to pass. Bills 247 and 326, both introduced in 2025, propose formalising this into mandatory VASP registration, but as of mid-2026 neither has been enacted.

Current Status

Virtual asset businesses in Panama currently operate by incorporating a Sociedad Anonima (S.A.) through MICI, obtaining a commercial license (Licencia Comercial) and a tax identification number (RUC), and registering with the UAF under Law 23 of 2015. UAF registration is mandatory: it requires appointing a compliance officer, implementing KYC and customer due diligence (CDD) procedures, establishing suspicious transaction reporting, and maintaining transaction records for a minimum of five years. Businesses whose activities cross into non-financial intermediation also register with the SSNF. Setup typically takes four to six weeks and costs approximately USD 10,000 to 15,000 including banking onboarding.

Bill 247 would add a UAF-supervised VASP registration layer, establish a National Council of Digital Assets (CONAD), legally recognize crypto as a valid exchange medium, and make smart contracts legally enforceable. Bill 326 would require licensing under the SMV for certain activities and establish a public VASP registry. Both bills remain in committee; Panama’s legislative process requires three National Assembly debates before presidential sanction.

Why No Framework

Panama’s repeated legislative failures reflect structural tension between its traditionally permissive business environment and the AML/CFT compliance demands of FATF and international partners. Bill 697 was nullified by the Supreme Court in July 2023 on procedural grounds stemming from the 2022 partial veto, which itself arose from concerns that the bill’s AML provisions were insufficient to meet FATF standards. Each reset requires restarting the three-debate legislative process. President Mulino has expressed public support for blockchain development but has not committed to a specific timetable for enacting the pending bills.

What Operators Should Know

Until comprehensive legislation passes, UAF registration and Law 23 of 2015 AML compliance are the binding legal obligations for crypto businesses in Panama: failure to register or maintain adequate AML controls exposes operators to administrative sanctions and potential criminal liability. Operators should also factor in the December 2025 CARF-MCAA commitment, which will require crypto service providers to report transaction data to the DGI for automatic exchange with partner tax authorities starting in 2027. Bank onboarding standards continue to tighten, with higher evidence requirements for source of funds, Know Your Transaction (KYT) controls, and sanctions screening. Mandatory VASP licensing is most plausible from 2027 onward if current bills advance without a further veto.

Market Characteristics

Adoption Patterns

Panama’s crypto market is oriented more toward business incorporation and institutional activity than mass retail adoption. A growing ecosystem of crypto businesses is attracted by the territorial tax system, dollarized economy, and low barriers to entry. The municipal-level acceptance of crypto payments in Panama City represents a pragmatic, voluntary approach, distinct from El Salvador’s legal tender mandate and workable without new primary legislation.

Industry Focus

Panama’s crypto ecosystem centers on company formation, exchange operations, and payment processing. Approximately 9% of Panama’s fintech companies incorporate blockchain technology. The country’s appeal lies in its 0% effective tax on foreign-source crypto income, USD-based economy, strategic geographic position bridging North and South America, and relatively fast company setup. Mayor Mizrachi has discussed concepts including a municipal Bitcoin reserve and Bitcoin priority for Panama Canal transit, though these remain at the discussion stage.

Regulatory Evolution

Panama was placed on the FATF grey list in June 2019 and removed on October 27, 2023, following an on-site FATF mission confirming implementation of the full action plan, including the beneficial ownership registry under Law 129 of 2020. The European Union, which had added Panama to its own high-risk list in May 2020, formally removed the country via Delegated Act C(2025) 3815 on July 9, 2025. Panama remains on the EU list of non-cooperative tax jurisdictions, pending changes to substance requirements for locally registered companies.

The trend points toward tighter compliance obligations rather than rapid liberalization. The CARF-MCAA signature commits Panama to international crypto tax transparency from 2027. Bill 247’s proposed CONAD structure and UAF-supervised VASP registration, if enacted, would formalize existing de facto obligations in line with FATF Recommendation 15. Panama participates in GAFILAT (Grupo de Accion Financiera de Latinoamerica) and continues strengthening its AML/CFT framework.