We are seeing a new phenomenon. Something many people wanted but did not expect to see so soon, governments deciding to adopt crypto. And this adoption wave is coming from Central America.
First, it was El Salvador, and now we have Panama.
Now a member of the Panamanian Congress presented a bill with the idea of regulating cryptocurrencies. Meet Gabriel Silva, the Panamanian congressman looking to give bitcoin a push.
The proposal came a few days after El Salvador became the first country to adopt Bitcoin as legal tender. And after Gabriel Silva’s proposal, it seems like El Salvador may not be the only country to do so.
Even if Silva’s proposal does not reach that level, it does provide a little more validity to these digital currencies.
Panama’s Crypto Law: What Is It About?
The Panamanian congressman introduced legislation to regulate the use of cryptocurrencies. Silva presented the bill intending to make Panama a country akin to these new technologies. These technologies driving the digital economy might play a huge role in the future. And Panama wants to take part in that future.
The bill proposes that individuals or legal entities in Panama may freely choose to use cryptocurrencies as payment. They may accept it for any civil or commercial transaction… As long as it is not prohibited by the legal system.
In Panama, it is not illegal to hold or use cryptocurrencies. This is because the Panamanian Constitution does not have a mandatory currency. Thus, this project seeks to put an order in the Panamanian tax rules and have an accurate regulation.
Nonetheless, this project seeks to do much more than regulating cryptocurrencies.
Although cryptocurrencies are subject to the capital gains regime – just as in the United States – the bill exempts them from value-added tax.
In addition, the proposed legislation also aims to develop principles of banking interoperability. This would allow existing and new financial systems to work together.
It would also imply the possibility of linking a bank account to an exchange.
In addition, part of this bill’s goal is to allow crypto to be used more widely. It also aims to create suitable conditions that will allow crypto to be used in local stores.
Digitization, DAOs, and Digital Identity for Panama
And it is worth mentioning that the bill also aims to expand the digitization of the state through the use of distributed ledger technology. That is, to digitize the identities of individuals and legal entities.
Why is digitization so important for Panama?
This new model will allow Panama to support smart contracts and DAOs (decentralized autonomous organizations). The country has all the potential to be a digital identity provider for the rest of the world. They would be following in Estonia’s footsteps with their digital residency program.
Thus, Panama is expected to become a center for DAOs in the future.
However, we cannot know with certainty whether this will happen in the future. But we can say that this legislation if approved, will mark a before and after for Panama.
Truth be told — the more legal recognition crypto has, the more trust it will generate in people. And the more people join the movement, the more results it will generate.
Yet, while more countries must open up to the cryptomarket, education has to be included. Governments have to educate their citizens on the use of these digital currencies.
Finally, while this is an important step for Panama, we must still wait whether the bill will be approved.
If approved, we will celebrate technological and economic advancement. In case it is rejected, at least Panama would set a precedent. They could show they have the potential to take on the use of cryptocurrencies.