Panama Delays Legalizing Crypto On This Major Factor

Panama’s President Laurentino Cortizo on Thursday said he will not sign the pending crypto bill into law until strict anti-money laundering clauses are added to the bill. The decision put pressure on crypto exchanges and firms already preparing to enter the new market.

Panama’s legislative assembly last month passed the bill regulating the use of cryptocurrencies and licensing crypto exchanges in the country. However, until the president signs the bill, the crypto adoption in Panama remains uncertain.

Panama President Suspends Crypto Law Signing

Panama’s President Laurentino Cortizo believes anti-money laundering rules are crucial for the country as Panama has been targeted for money laundering and other financial crimes, reported Bloomberg. The Financial Action Task Force (FATF) has added Panama to its “gray list” of countries with weak anti-money laundering provisions.

“If I’m going to answer you right now with the information that I have, which is not enough, I will not sign that law. I have to be very careful if the law has clauses related to money laundering activities. Anti-money laundering activities are very important to us.”

Cortizo administration is currently working on implementing recommendations of the FATF to prevent money laundering, terror financing, and financial crimes. In fact, the anti-money laundering rules are beneficial for crypto regulation. The use and commercialization of crypto assets in the country could further enhance offshore financial services.

The private and public use of crypto assets will improve the financial services system in Panama. Moreover, banks will become crypto-friendly and crypto assets could help the unbanked due to high internet use.

Panama’s lawmaker Gabriel Silva asserts the bill allows trading and use of crypto assets, issuance of digital securities, new payment systems, and tokenization of precious metals.

However, experts think crypto acceptance might make Panama a place lacking financial transparency. Crypto payments skip the due diligence processes, which may put Panama in a bad position.

Market Entry of Crypto Exchanges in Panama

Crypto exchanges and firms are already preparing to enter Panama after the assembly passed the crypto bill. Crypto derivatives exchange Deribit had already moved to Panama earlier while expanding KYC rules. Now, the crypto firms and exchanges seeking to expand face uncertainty. 

Crypto adoption is growing in Panama as interest in digital assets, NFTs, metaverse, etc. becomes popular among its people. The use of blockchain technology is under special consideration by the government.