Panama crypto bill Awaits Supreme Court verdict

A disagreement has arisen between the Panama National Assembly and the government regarding a proposed crypto law. In April, Panama legislators passed a legislative draft aimed at controlling cryptocurrencies, including Bitcoin, in the country.

Nevertheless, President Cortizo warned a few weeks later that he would only sign it if it incorporated extra Anti-Money Laundering (AML) regulations.

On 26 January, Panamanian President Laurentino Cortizo referred the crypto law enacted last year to the Supreme Court for examination, asserting that the crypto bill contradicts fundamental aspects of the constitution and cannot be implemented.

What is the controversy with the Panama crypto bill?

In September 2021, a Panama crypto bill was introduced to align the nation with the digital economy, blockchain technology, cryptocurrency, and the internet. According to the legislation, Panamanians are allowed to use cryptocurrency, including but not limited to Bitcoin and Ethereum, as a substitute form of payment for any commercial or civil transaction.

The government's innovation authority would also examine blockchain or distributed ledger technology for digitising identity. The Financial Action Task Force, which aims to enhance financial transparency and prevent money laundering, proposed legislation permitting private and public usage of cryptocurrency assets.

The Panamanian National Assembly approved the bill on 28 April, 2022, with a vote of 38 in favour and none against. With this, Panama could soon become the third country in the world to treat cryptocurrencies on equal footing with fiat currency.

A definitive statement from the president's office stated that the provisions of articles 34 and 36 in the bill, which establish administrative structures within the government, infringe upon the state's separation of powers and therefore are invalid. After partially rejecting the legislation in June, President Cortizo also expressed that the approval process for the bill was inadequate.

At the time, the president stated that further amendments were needed to the legislation to align it with the latest regulations. It is now up to the Supreme Court to determine whether to declare Bill No. 697 unenforceable or to give it the green light with modifications.