Stablecoin issuer / redeemer in Panama

No Crypto-Specific Licensing Regime: As of late 2023 / early 2024, there is no specific "virtual asset license" in Panama issued by a dedicated crypto regulator.

Primary Relevance: This is the most likely regulator to assert jurisdiction over virtual asset activities, mainly for AML/CFT compliance. Panama is a member of the Financial Action Task Force (FATF) and is committed to implementing its recommendations, which include regulating VASPs for AML/CFT purposes.

Applicability: Exchanges, custody providers, and payment processors dealing with virtual assets are highly likely to be considered "Designated Non-Financial Businesses and Professions" (DNFBPs) or fall under an extended interpretation of "financial activities" for AML purposes.

Requirement: While not a "license," these entities would need to register with the SSNF for AML/CFT oversight and comply with all associated requirements.

Regulatory Reference: Law 23 of 2015 (Ley 23 de 2015, que adopta medidas para prevenir el blanqueo de capitales, el financiamiento del terrorismo y el financiamiento de la proliferación de armas de destrucción masiva). This law designates certain entities as "obligated subjects" (sujetos obligados) for AML/CFT purposes. While it doesn't explicitly name "VASPs," its broad scope and subsequent interpretations can cover them.

Relevance: If the virtual asset is deemed a "security" under Panamanian law, then the SMV would have jurisdiction. This is a crucial distinction.

Applicability: Projects issuing tokens that represent ownership, a right to profit, or other characteristics of traditional securities would fall under the SMV's purview. Exchanges listing such tokens, or custody providers holding them, would then need to comply with securities regulations.

Requirement: A license as a broker-dealer, investment adviser, or other regulated entity under securities law might be required, depending on the specific service.

Regulatory Reference: Law Decree 1 of 1999 (Decreto Ley 1 de 1999, por el cual se reorganiza el mercado de valores en la República de Panamá).

Relevance: Less likely to directly regulate pure crypto activities unless they involve fiat currency in a way that resembles traditional banking or payment services.

Applicability: If an exchange, custody provider, or payment processor holds significant fiat balances for clients, offers fiat-to-crypto conversion with a "trust" element, or provides services that closely mimic those of licensed financial institutions (e.g., issuing payment instruments that are essentially fiat-backed digital money), the SBP might assert jurisdiction. This is a high bar, as the SBP primarily regulates licensed banks and financial groups.

Requirement: A banking license or a license as a specific type of financial institution would be required, which is highly stringent.

Regulatory Reference: Law Decree 2 of 2008 (Decreto Ley No. 2 de 2008, que regula la actividad bancaria en Panamá).

If classified under securities or banking laws, significant capital requirements would apply (e.g., millions for a bank, hundreds of thousands for certain securities brokers).

Law 23 of April 27, 2015 (Ley 23 de 27 de abril de 2015): This is the foundational AML/CFT law in Panama. It adopted measures to prevent money laundering, financing of terrorism, and financing of the proliferation of weapons of mass destruction. It established the Financial Analysis Unit (UAF) and defined "obligated subjects" (sujetos obligados), which, through subsequent interpretations and amendments, have come to include VASPs. This law sets general obligations for customer due diligence, suspicious transaction reporting, and record-keeping.

Law 1 of January 5, 2024 (Ley No. 1 de 5 de enero de 2024): This is the most crucial and recent piece of legislation specifically for virtual assets. It amends Law 23 of 2015 and other related laws to define virtual assets and virtual asset service providers (VASPs), establish a licensing and supervision regime, and explicitly subject VASPs to AML/CFT obligations under the supervision of the Superintendency of Banks of Panama (SBP). This law ensures Panama's compliance with FATF Recommendation 15 on new technologies and VASPs.

Superintendencia de Bancos de Panamá (SBP) - Superintendency of Banks of Panama:

Unidad de Análisis Financiero (UAF) - Financial Analysis Unit of Panama:

Identification and Verification:

Ongoing Monitoring: Continuously monitoring the business relationship and transactions to ensure consistency with the VASP's knowledge of the customer, their business, and risk profile. This includes scrutinizing complex, unusual large transactions, and all unusual patterns of transactions that have no apparent economic or lawful purpose.

Enhanced Due Diligence (EDD): Applying EDD measures for high-risk customers, business relationships, or transactions, which include:

Obligation to Report: VASPs are legally obligated to report any suspicious transaction or activity to the UAF, regardless of the amount. A transaction is suspicious if the VASP has reasonable grounds to suspect that it may be related to money laundering, terrorism financing, or other illicit activities.

Duration: Records must typically be kept for at least five (5) years after the business relationship has ended or after the date of the transaction.

Bill 697 / Law 173 (Proyecto de Ley No. 697 / Ley 173): This bill aimed to regulate the commercialization, use, and issuance of digital assets and create a framework for their recognition, custody, and tokenization. It specifically included provisions for:

Status: Partially Vetoed: The bill passed the National Assembly in April 2022. However, President Laurentino Cortizo partially vetoed it in June 2022.

Current Status: The bill was returned to the National Assembly for reconsideration of the vetoed articles. As of now, it remains in legislative limbo, meaning the comprehensive framework it proposed, including specific custody regulations, is not currently in force.

Current State: None. As of now, Panama does not have any specific tax legislation addressing cryptocurrencies or virtual assets. Taxation relies on the existing Fiscal Code and the application of its general principles, particularly the territorial tax system.

Conclusion: The key determinant is the source of the income. Most crypto-related income for Panamanian residents/businesses will likely fall under the foreign-sourced exemption.

General Business Income: If an entity's primary business activity is high-frequency crypto trading within Panama, any profits might be classified as regular business income rather than capital gains, and taxed under corporate income tax rules (see below).