On Thursday the National Assembly of Panama passed a bill to regulate and commercialize the use of crypto and other digital assets in the country. Panama is often dubbed as the hub of offshore transactions and sometimes even a “tax haven”.

English Translation: Project Law No. 697, which regulates the commercialization and use of crypto actives, the issuance of digital value, the tokenization of precious metals and other goods, payment systems and dictates other provisions, was approved in the third debate.

The bill will now be passed to President Laurentino Cortizo for his assent. It was unanimously passed after 38 votes in favor, two abstentions, and no votes against.

The approval of the bill has permitted the public and private use of crypto. It has made it possible for people to pay their taxes in cryptocurrencies. Some experts opined that this could further push the message that the Central American country lacks financial transparency.

It covers regulations regarding the use and trade of crypto assets, tokenization (when rights to an asset are converted into digital formats) of precious metals, new payment systems, and the issuance of digital securities.

As per Gabriel Silva, an independent lawmaker in the National Assembly, the legislation covers a broader aspect when compared to El Salvador’s decision to recognize Bitcoin as a legal tender. Silva was one of many legislators who supported the bill staunchly.

“We’re seeing the emergence of many different types of crypto assets like works of art…That’s why we didn’t want to limit ourselves only to cryptocurrencies.”

The legislation gives the option to Panamanians to pay their bills for any commercial or civil (taxes) purpose in cryptocurrencies, given they are not illegal. As per Romain Dromard, chief executive officer at financial investment advisory firm K&B Family Office, this bill would further tarnish the image of the country as a tax haven. Panama is already on the list of tax havens of the European Union.

However, Belisario Castillo Saenz, chief executive officer of tokenization firm Feänor Corp emerged as an advocate for the bill. He put forward the argument that crypto assets could help with financial inclusion since the internet inclusion rate is higher than those who have bank accounts (only one in four have a bank account in Panama).

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