The Panamanian Legislative Assembly has passed a bill regulating the commercialization and use of cryptocurrencies. Once signed by the President, it will enable residents of the country to pay their taxes and civil debts using multiple digital assets.
A Rival to El Salvador?
Gabriel Silva – the 32-year-old Panama congressman behind the bill – announced its passing on Thursday, after it received approval in its third debate. He said the law will help make Panama “a hub for innovation and technology” in Latin America.
When Panama’s central American neighbor El Salvador adopted Bitcoin as legal tender, it saw an influx of tourists and foreign money. This law may have a similar effect, given that its language contains some similar stipulations.
For example, Article 8 of a Google-translated version of the bill reads that “the organs and entities of the Republic of Panama may receive payments, directly or through payment processors or agents contracted for this purpose, for taxes, fees and other tax obligations on crypto-assets.” Cryptos allowed for this purpose will be determined by future legislation.
Meanwhile, article 7 states that a multitude of cryptocurrencies may be freely agreed upon “as a means of payment for any civil or commercial [debt] not prohibited by the legal system of the Republic of Panama”. These cryptocurrencies include Bitcoin (BTC), Ethereum (ETH), XRP, Litecoin (LTC), XDC Network (XDC), Elrond (EGLD), Stellar (XLM), IOTA, and Algorand (ALGO).
Furthermore, by the rules of Panama’s territorial tax system, cryptocurrencies will incur 0% capital gains tax. Given these details, the new law makes Bitcoin – and possibly many other cryptocurrencies – a de facto legal tender.
However, speaking on Radio Panama this week, Silva clarified some impotant differences it has from El Salvador’s law. For one, it doesn’t obligate businesses to accept crypto payments.
“Here in Panama, we are making this optional,” he said. “In addition, the El Salvador law speaks only of bitcoin. However, the plan approved in the first debate establishes the possibility of using any cryptocurrency.”
“We cannot and do not want to close the door to the use of more than one [type of ] cryptocurrency,” he stated.
Bitcoin Adoption for the Global South
Bitcoin has been making waves this week as its regulatory adoption spreads across numerous developing countries. Just yesterday, CryptoPotato confirmed that the cryptocurrency had been made legal tender in the Central African Republic.
Government adoption doesn’t mean user adoption, however. Since its inception, only 40% of the country had downloaded the Chivo Bitcoin wallet in El Salvador, with most only doing so for its $30 BTC incentive.