Panama -- Licensing Requirements Regulatory Overview

**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.

**General Business Registration:** Any company wishing to operate in Panama, including those involved in virtual assets, must still:

Be incorporated under Panamanian law (Public Registry).

Obtain a business license ("Aviso de Operación") from the Ministry of Commerce and Industries.

Comply with general tax and labor laws.

**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.

*URL for Law 23 of 2015 (Spanish):* Link to Gaceta Oficial for Ley 23 de 2015 (This is an older link, newer consolidated versions might exist via the Asamblea Nacional website)

**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).

*URL for Law Decree 1 of 1999 (Spanish):* Link to Gaceta Oficial for Decreto Ley 1 de 1999

**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).

**No specific crypto VASP capital requirements.**

General corporate capitalization requirements apply for company formation.

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).

**AML/KYC (Anti-Money Laundering / Know Your Customer):**

**CRITICAL.** This is the primary regulatory burden for virtual asset businesses in Panama.

Entities likely fall under **Law 23 of 2015**.

Implementing a robust AML/CFT compliance program.

Performing customer due diligence (CDD) and enhanced due diligence (EDD) where necessary.

Monitoring transactions for suspicious activities.

Reporting suspicious transactions (STRs) to the Financial Analysis Unit (UAF - Unidad de Análisis Financiero de Panamá).

Maintaining records for a specified period.

**Required for any registered Panamanian company.**

Must have a registered office address in Panama.

Must have a resident agent (a Panamanian lawyer or law firm).

Management (directors and officers) can be foreign, but generally, local operational presence is expected for active businesses.

Engage a Panamanian law firm to incorporate a company (e.g., a Sociedad Anónima or S.A.).

Register the company with the Public Registry of Panama.

**Business License (Aviso de Operación):**

Apply for an Aviso de Operación with the Ministry of Commerce and Industries (MICI). This typically requires specifying the business activities (e.g., "technology services," "software development," "electronic commerce," which would implicitly cover crypto, as there's no specific category).

If the business activity is deemed an "obligated subject" under Law 23 of 2015, register with the Superintendencia de Sujetos No Financieros (SSNF) and establish an AML/CFT compliance program.

Register with the Dirección General de Ingresos (DGI - Directorate General of Revenue) for tax purposes.

If there's any risk of the virtual asset being classified as a security or the services resembling regulated banking/payment services, proactive engagement with the SMV or SBP (through legal counsel) would be necessary to clarify regulatory standing and potential licensing requirements under their respective laws.

**Investment of Money (or assets):** The participant contributes value to the scheme.

**In a Common Enterprise:** The fortunes of the investors are linked to each other and to the success of the promoter.

**With an Expectation of Profit:** The primary motivation for the investment is financial gain.

**Principally from the Efforts of Others:** The profits are generated through the managerial or entrepreneurial efforts of the promoter or a third party, rather than the active participation of the investor.

**Security Tokens:** These are tokens explicitly designed to represent traditional securities (e.g., fractional ownership in real estate, company shares, bonds, or investment fund units). These would almost certainly be considered securities.

**Investment/Profit-Sharing Tokens:** Tokens that promise future profits, dividends, or a share in the project's success, where the holder's primary expectation is financial gain derived from the efforts of the token issuer or a third party, would be classified as securities. This includes many tokens issued through Initial Coin Offerings (ICOs) or Security Token Offerings (STOs).

**Payment/Currency Tokens (e.g., Bitcoin, Ether):** Generally, widely decentralized cryptocurrencies like Bitcoin or Ether are not considered securities in Panama, similar to most jurisdictions, unless they are offered or packaged as part of an investment scheme (e.g., a managed crypto fund).

**Registration:** The issuer and the specific security (token) must be registered with the SMV. This involves:

Submitting a comprehensive prospectus detailing the project, the token's characteristics, financial information of the issuer, risks, and use of proceeds.

Providing corporate documentation and information about key personnel.

Ongoing reporting requirements, including financial statements and significant events.

**Exemptions:** Law Decree No. 1 provides certain exemptions from full registration, which could potentially apply to token offerings:

**Private Placements:** Offerings made to a limited number of qualified investors (e.g., institutional investors, high-net-worth individuals) may be exempt, subject to specific conditions and limitations on re-sale.

**Small Offerings:** Offerings below a certain monetary threshold or to a very small number of investors might also qualify for an exemption, though specifics would need to be checked against current SMV regulations.

Even with an exemption, Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) requirements, as well as general anti-fraud provisions, would still apply.

**Regulated Platforms:** Secondary trading of such tokens would ideally need to occur on exchanges licensed and regulated by the SMV. Panama's primary stock exchange is the Bolsa Latinoamericana de Valores (LATINEX, formerly Bolsa de Valores de Panamá). Any platform facilitating the trading of tokenized securities would likely need to be authorized as a broker-dealer or an exchange.

**Licensed Intermediaries:** Participants in the secondary market (e.g., brokers, dealers, investment advisors) would need to be licensed by the SMV.

**Market Conduct Rules:** All trading activities would be subject to market conduct rules, including prohibitions against market manipulation, insider trading, and other fraudulent practices.

**AML/CFT:** Secondary trading platforms and intermediaries would be subject to Panama's AML/CFT framework, notably **Law No. 23 of April 27, 2015**, and subsequent amendments, which require customer due diligence (KYC), suspicious transaction reporting, and other compliance measures.

A relatively nascent market for tokenized securities offerings originating directly from Panama.

The SMV generally focuses its enforcement on traditional securities violations and fraudulent schemes.

If a crypto offering were clearly fraudulent or violated securities laws, the SMV would typically issue **cease-and-desist orders**, impose **administrative fines**, and potentially refer cases to **prosecutorial authorities** for criminal charges under the existing legal framework for securities fraud.

**Superintendencia del Mercado de Valores (SMV) Official Website:** `https://www.smv.gob.pa/`

(Look for "Normativa" or "Marco Legal" for laws and regulations).

**Law Decree No. 1 of July 8, 1999 (General Law of the Securities Market):**

This is the foundational law. You'd typically find it linked on the SMV's "Normativa" section, or by searching the Official Gazette (Gaceta Oficial) archives. A direct, stable URL from the SMV can sometimes be tricky for specific laws, but searching for "Decreto Ley No. 1 de 1999 SMV Panamá" on Google often yields results from government sources.

*Example source (might not be the SMV's direct host, but contains the text):* `https://www.gacetaoficial.gob.pa/pdfTemp/23838_A/GacetaOficial_23838A_19990708.pdf` (This is the Gaceta Oficial publication).

**Law No. 23 of April 27, 2015 (Anti-Money Laundering and Counter-Financing of Terrorism):**

This law, and its subsequent amendments, govern AML/CFT for financial institutions and designated non-financial businesses and professions, including those dealing with virtual assets if they fall under the definition of financial activities.

*Example source (again, potentially Gaceta Oficial):* `https://www.gacetaoficial.gob.pa/pdfTemp/27776_A/GacetaOficial_27776A_20150428.pdf`