The Panamanian crypto law will allow the state to issue its own digital asset and create a wallet. The government plans to digitize the identity of citizens and develop a CBDC through blockchains.
The National Assembly of Panama recently approved the law to regulate the use of crypto assets as payment in that territory in the third debate.
The Panamanian parliament thus concluded the necessary phases for the Executive to review the law, considering the first debate held on April 22nd.
The legal document advances the objectives it pursues and the legal provisions among its first articles. It establishes that people can only use nine cryptocurrencies in the Central American country. In addition to Bitcoin (BTC) and Ether (ETH), they include XRP, Litecoin (LTC), XDC Network (XDC), Elrond (EGLD), Stellar (XLM), IOTA, and Algorand (SOMETHING).
Citizens will be able to pay for goods and services with cryptocurrencies when the president of Panama approves the law in the next 30 days. However, the document does not convert Bitcoin into legal tender, as El Salvador did last year and the Central African Republic did recently.
It is relevant to remember that the law does not mention stablecoins, although they are among the most widely used worldwide. In 2019, those assets reached the highest daily and monthly trading volume.
The law also highlights that Panama will be able to venture into issuing its own digital asset. They would hire a provider that ensures the creation of digital wallets so that natural and legal persons can make payments and exchange cryptocurrencies safely. However, they do not clarify whether they will use blockchain technology to create a central bank digital currency (CBDC).
Using Cryptocurrencies for Paying Taxes and Fees
The citizens and companies based in Panama will be able to pay taxes, fees, and other fiscal obligations with crypto assets. As the law guarantees technological adequacy, Panamanian agencies and institutions can receive payments directly or through a payment agent.
Cryptocurrency users usually wonder whether they have to pay taxes for holding and trading cryptocurrencies. The Panamanian crypto law explains that the taxpayer will undergo a capital gains treatment regarding the sale of crypto assets with underlying value. Consequently, the tax calculation on the profits obtained will have a fixed rate of 4%, according to the legal document.
The law states that the transfers of negotiable documents, securities, and crypto assets will be exempt from paying that tax.
Tokenized Precious Metals and Real Estate Must Have a Physical Backup
The 9th article of the law states that natural and legal persons may use cryptocurrencies to represent securities and other assets. Securities issuers are private companies or states that seek to finance themselves through a public offer on the stock market by issuing debt or capital securities.
Those entities will be able to use blockchain or crypto assets to represent those securities and other assets, including precious metals and real estate.
Concerning the tokenization of minerals, there must be a 100% physical backup deposited in security vaults that meet international standards in Panama or another territory.
By Alexander Salazar
