President of Panama vetoes crypto law citing FATF recommendations


Although the President earlier referred to the legislation as creative, his concerns surrounding anti-money laundering procedures have prompted the cabinet to reopen a discussion on the bill.

The President of Panama, Laurentino Cortizo, has partly vetoed Bill No. 697, sometimes known as the “crypto bill,” stating that it required further work to conform to Panama’s financial standards.

After Panama’s National Assembly approved the crypto law in late April 2022, President Cortizo warned in May that he wouldn’t sign it unless it contained extra Anti-Money Laundering regulations.

Local media source La Prenda received a copy of the 32-page veto and said the President noted that it is “crucial” that cryptocurrency legislation complies with new FATF standards establishing “fiscal transparency and prevention of money laundering.”

President Cortizo has previously referred to the measure as an “innovation law” and signalled his support for some sections of the bill. However, he has said that criminal cryptocurrency usage must be addressed.

Congressman Gabriel Silva, who helped propose the law in September 2021, said on June 16 (through translation) that the veto was “a missed chance to create employment, attract investment, and integrate technology and creativity into the public sector.”

“The nation needs greater chances and financial inclusion,” Silva said, adding that Congress will examine the veto to make modifications, which will then be forwarded on for discussions.

If the measure is ultimately enacted, Panama will become the second nation in Central America to restrict the use of cryptocurrency. El Salvador was the first nation to officially recognise Bitcoin (BTC) as legal money.

In contrast to El Salvador, Panama’s proposed legislation would encompass cryptocurrencies other than Bitcoin and would not oblige local firms to accept digital assets.

According to the measure, Panamanians “may freely agree on the usage of crypto assets, including Bitcoin and Ethereum (ETH),” as an alternative form of payment for “any civil or commercial transaction.”

The measure would also govern the tokenization of goods like precious metals and cover the issue of digital currency. The government’s innovation authority would also conduct research on the digitalization of identification using blockchain or distributed ledger technologies.

Also Read: Kazakhstan will now let crypto exchanges open bank accounts

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