Panama

Disclaimer: This overview is provided for informational purposes only and does not constitute legal or financial advice. Cryptocurrency regulations change frequently. Always consult qualified legal and financial professionals and verify information with official regulatory bodies before making decisions based on this content.

Legal Classification & Regulatory Framework

Cryptocurrency Status

Cryptocurrencies are legal in Panama but operate in a largely unregulated environment. No comprehensive crypto-specific legislation exists. 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 via mutual agreement without formal legal tender status. Virtual assets fall under the broad „movable property“ classification per the Civil Code but lack a specific regulatory definition.

In 2018, the Superintendency of the Securities Market (SMV) stated in Opinion 7 that cryptocurrencies are „not recognized as securities or currencies under current Panamanian regulations,“ while the Superintendency of Banks (SBP) confirmed in Notice 5 that crypto activities fall outside its regulatory competence. An attempt to pass comprehensive crypto legislation (Bill 697) succeeded in the National Assembly in 2022 but was partially vetoed by President Cortizo over AML concerns. After amendments and re-approval, the Supreme Court declared the entire bill unconstitutional in July 2023 on procedural grounds, effectively resetting Panama’s crypto legislative efforts.

Tax Treatment

Panama operates a territorial tax system, which 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 therefore 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 theoretically apply to domestic crypto business revenue, though the Directorate General of Revenue (DGI) has issued no specific guidance on cryptocurrency taxation. The annual corporate fee is USD 250-300 regardless of activity. In December 2025, Panama signed the OECD Crypto-Asset Reporting Framework Multilateral Competent Authority Agreement (CARF-MCAA), committing to international crypto tax transparency.

Regulatory Oversight

Panama has no single dedicated crypto regulator. The SMV oversees the securities market and would assert jurisdiction if tokens qualified as securities. 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) collects and analyzes suspicious transaction reports from all entities, including crypto businesses. The Superintendencia de Sujetos No Financieros (SSNF) supervises AML/CFT compliance for non-financial entities and administers the beneficial ownership registry established by Law 129 of 2020. The Ministry of Commerce and Industries (MICI) 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 and risk-averse toward crypto companies. However, 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 partners with Panama City for its municipal crypto payment acceptance.

Many crypto businesses use international electronic money institution providers as settlement partners. Bank account opening for crypto companies typically requires comprehensive source of funds documentation, a multi-year business plan, AML/KYC policy documentation, and a live website with terms of service. While banks are not prohibited from serving crypto clients, the regulatory ambiguity creates compliance uncertainty that makes most institutions cautious.

Licensing Requirements

Panama does not have a dedicated VASP license or crypto-specific licensing regime. Crypto businesses operate by incorporating a Panamanian company (typically a Sociedad Anonima), obtaining a commercial license (Licencia Comercial) from MICI along with a tax identification number (RUC), and implementing a full AML compliance program per Law 23 of 2015 with UAF registration for suspicious transaction reporting. The process typically takes four to six weeks and costs between USD 10,000 and 15,000 including banking setup.

Bill 247, introduced in March 2025, proposes establishing a mandatory VASP licensing regime, a national VASP database managed by the UAF, recognition of crypto as a valid exchange medium, legal enforceability of smart contracts, and alignment with FATF standards. The bill was referred to a subcommittee in September 2025 and has not been enacted. Until such legislation passes, the combination of company incorporation, commercial licensing, and AML compliance constitutes Panama’s de facto regulatory framework for crypto businesses.

Innovation Support

Panama has positioned itself as a blockchain hub for Latin America. Panama Blockchain Week 2025, held in April with presidential participation from Jose Raul Mulino, drew over 3,000 international visitors and signaled strong political support for the sector. 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. The system operates through Towerbank, which receives crypto and converts to dollars on the spot, as public institutions must legally receive funds in dollars.

Panama’s free trade zones support tech and crypto businesses. Ciudad del Saber (City of Knowledge) offers special tax incentives and immigration benefits for technology companies. Panama Pacifico provides income tax exemptions extending into the 2040s for qualifying software and technology firms. The country’s dollarized economy eliminates currency conversion risk, and the ease of incorporation (no crypto license required, four to six week timeline) makes it attractive compared to jurisdictions requiring lengthy licensing processes.

Market Characteristics

Adoption Patterns

Panama’s crypto market is oriented more toward business incorporation and institutional activity than mass retail adoption. The country does not rank among the top 20 in the Chainalysis Global Crypto Adoption Index but has a growing ecosystem of crypto businesses 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 to adoption, distinct from El Salvador’s national-level legal tender mandate.

Industry Focus

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

Regulatory Evolution

Panama’s regulatory trajectory reflects tension between its permissive business environment and growing international pressure for AML/CFT compliance. The country was placed on the FATF grey list in June 2019 for strategic AML/CFT deficiencies and removed in October 2023 after implementing reforms including the beneficial ownership registry (Law 129 of 2020) and strengthened AML regulations. Panama was subsequently removed from the EU’s list of high-risk third countries in 2025.

The failed 2022 crypto bill and the pending Bill 247 illustrate the challenge of balancing regulatory clarity with Panama’s traditionally permissive approach. The current administration under President Mulino appears supportive of blockchain development, but comprehensive legislation remains elusive. Panama participates in GAFILAT (Financial Action Task Force of Latin America) and continues working to strengthen its AML/CFT framework. The trend points toward tighter bank onboarding standards and enhanced evidence requirements for source of funds rather than a rapid move toward formal VASP licensing.

For Current Information:

• Superintendency of Banks of Panama (SBP)
• Superintendency of the Securities Market (SMV)
• Financial Analysis Unit (UAF)
• FATF – Panama Country Page
• Ministry of Commerce and Industries (MICI)