Digital currencies were created for transactions between buyers and sellers to be operated decentrally and directly without the involvement of third parties. In the past few years, cryptocurrencies have gained traction all around the globe, but there is still a lot of clarity needed around regulations and the status cryptocurrencies carry, given the fact that countries are trying to frame laws specific to their jurisdiction.
We are still far away from a regulatory framework on a global scale. While many countries have embraced cryptos uninhibitedly, others have expressed their skepticism against the innovative class by issuing bans or imposing stringent laws on cryptocurrencies.
However, the scenario is slowly changing, with some governments actively acknowledging their significance and introducing progressive laws and policies. For example, in October 2021, El Salvador became the first country to recognize cryptocurrency as a legal tender and allow its usage alongside the US Dollar, while Nigeria, instead of introducing regulations for existing digital currencies, decided to launch a central bank digital currency (CBDC). India is on the same lines as well.
Panama Bill, which was recently introduced in Panama’s National Assembly, is being touted as another progressive rulebook to help the crypto and blockchain ecosystem thrive. Let us see what Panama’s Crypto Bill is and what we can learn from it.
What is Panama’s Crypto Bill?
Panama is a Central American country popular as an offshore financial services center. On the 28th of April, 2022, a Crypto Bill was introduced in the Panama National Assembly to regulate the usage and commercialization of cryptocurrencies or crypto assets within the country.
The Panamanian Legislative Assembly held a session on the bill, and with thirty-eight votes in favor of it, two absentees, and no votes against it, the bill was passed in the assembly. It is yet to be officially introduced as a law in the country as it still requires the signature of the President of Panama, Laurentino Cortizo, for that to happen.
Panamanian Congressman Gabriel Silva shared the news about Panama’s Crypto Bill on Twitter, stating, ‘Crypto Law: Making Panama Compatible with the Digital Economy, Blockchain, Crypto Assets, and the Internet.’
This bill aims to provide “legal, regulatory, and fiscal certainty to the use, possession, and issuance of digital value and crypto assets in the Republic of Panama.”
The Provisions under the Panama Bill
The bill has been introduced to improve the country’s image and establish a new landmark in crypto. “This will help Panama become a hub of innovation and technology in Latin America,” Congressman Gabriel Silva said in a tweet. The following are the provisions inscribed in the Panama bill:
- The bill allows the public and private use of crypto assets.
- People will be able to pay their taxes in cryptocurrencies.
- People can use crypto assets as payment for any civil or commercial operation acceptable under the law
- The bill contains regulations related to:
- Trading and use of crypto assets
- Issuance of digital securities
- New payment systems
- Tokenization of precious metals
What Can We Learn from the Bill?
Though the introduction of the bill has posed some doubts, there are several parameters on which the bill scores over the laws/bills passed over the world previously.
First of all, the Panama bill is much broader in scope compared to even El Salvador’s standards – the nation which sets the ideal for accepting cryptocurrencies as legal tender. The bill includes regulations for digital assets like NFTs and other kinds of tokens besides cryptocurrencies.
Promoting cryptocurrency adoption and forming a law governing the same will ensure that the underserved and unbanked sections of the Panamanian society gain greater access to credit and financial services. Internet penetration is quite high in Panama, but only 25% of the people have a bank account.
The introduction of a crypto bill not only legitimizes cryptocurrency usage but also opens up the door for infinite possibilities. Firstly, banks, investors, and organizations that have been, for a long time, reluctant to offer their services in anything concerning digital assets, will feel less skeptical and come forward. The barriers created by banks to dissuade crypto-related transactions and trading can also be eliminated; however, it will be a long time before traditional institutions wholeheartedly trust crypto assets and use them.
Progressive regulations to take the impact of crypto assets on the financial economy of any country are the only right way to cope with the innovation that’s all the more inevitable and all set to arrive at our doors as the web3 era of the internet approaches even nearer.
Cryptocurrencies bring a host of utilities, including Defi, dApps, NFTs, metaverse, gaming, etc. Small businesses in need of funds can crowdsource funds via cryptocurrency platforms or borrow them from any of the Defi borrowing or lending platforms.
Cryptocurrencies are not just digital tokens and not an end in themselves. They fuel an entire economy built from the bottom up on the foundation of democratization and decentralization. As more and more people get introduced to the crypto world, more blockchain utilities, jobs, and opportunities will await the Panamanians at the farther end of the adoption cycle.Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.