Bitcoin Forum

What are the key differences between El Salvador’s approach to its law and your approach for Panama?

Echandi: We believe that they’re totally different efforts and they’re trying to solve completely different problems. El Salvador, we think, is a massive push toward Bitcoin adoption specifically, because it mandated adoption of bitcoin as legal tender. In Panama, that would be unconstitutional. We can’t force anyone to take a specific currency because we have monetary freedom established in the constitution.

So, we couldn’t even consider driving adoption in that manner. So, what’s the problem we’re trying to solve? First, we want people who deal with crypto to feel safe here, to provide a location that is open to the cutting edge of the internet. Second, if you’re creating a platform that is decentralized and taking custody of funds, the rules should be clear for you and they should be competitive. They should also mitigate the risks that normally exist with that. Third, if you’re doing something in the decentralized finance (DeFi) space, the rules should also be clear to you.

Next, banking interoperability would need to happen so you could serve people locally. The government has to digitize its operations so it can take tax payments in crypto and make itself more transparent and efficient.

So, we believe we’re solving different problems. What we want to do here in Panama is create an open space to innovate in the crypto and digital economy. We believe adoption will come on its own, whereas in El Salvador we believe they prioritize adoption over ecosystem creation. Both of us will probably end up in a similar place but in El Salvador I don’t think the tax situation is clear for Ethereum or other cryptos. Or if smart contracts take off on Bitcoin via RSK, how will that be dealt with?

Also, El Salvador was ahead of us in some aspects with banking interoperability because they have a central bank. That’s the good part of having a central bank, you have an entity that enforces standard rules. Panama has never had a central bank so we have to make things compatible, that’s a very Panama-specific problem.

Another difference is our focus is serving the rest of the world. El Salvador is focusing a lot on creating adoption within its population, and here we think this ecosystem will benefit our own population but also we want to benefit the rest of the world. Panama has always been a “for the rest of the world” country. We have a huge debt to serve our own population which hopefully will be fixed with measures like our proposal.

So, I would say it’s a completely different approach. We are more about creating clear rules so innovators come and create the future instead of having the government create the future for them. But I am excited to see them growing from the law there and I hope they continue to do well.

welcome to the club panama....with 3 million people who certainly already have a good knowledge of bitcoin and also have the natural wealth that is one of the world's tourist destinations, panama will be very successful with their bitcoin adoption.  what i see in the future about this is! that there will be more and more countries that recognize bitcoin, just wait one by one.

The game theory is hitting hard, and more and more countries will adopt bitcoin.

Not surprised to see more countries following El Salvador to make Bitcoin a legal tender. The point is, how good El Salvador survives and continues its Bitcoin adoption as a legal tender. If everything looks good and no massive bad issues related to their decision, more countries will trust them successfully in adopting Bitcoin as a legal tender. As the pioneer, El Salvador has a big role to trigger other countries like Panama joining Bitcoin adoption (BTC as a legal tender).

*Great news, we have another country to adopt Bitcoin fully.

I think I already see a thread like this, or its just another country?

This action of the deputies opens the doors to bitcoin (BTC) and cryptocurrencies, proposes to give legal stability to these digital elements, in addition, it is made explicit that the proposal does not oblige the use of bitcoin as a means of payment because it is presented in an optional

However, I think bitcoin will gradually have less returns (sadly) and less volatility, so this second part will also push people to spend.

I am not so sure I am understanding this correctly, but even if the legislation that was passed at Panama seems to be very positive and favorable for bitcoin, it does not really give it legal tender status, bitcoin can be used as a currency and businesses are free to accept it but it is optional, however if bitcoin was legal tender then businesses will actually be forced to do accept it, but in any case this is a good enough law and the fact that you do not have to pay capital gains on your bitcoin earnings will be very attractive especially for the whales that can relocate themselves to Panama.

The 0 capital gains tax is very good news that may encourage people to spend bitcoin as a currency, although there is still another part that may make people think twice before using it as a currency: waiting for the price to go up. However, I think bitcoin will gradually have less returns (sadly) and less volatility, so this second part will also push people to spend.

This way is much better than forcing it on the people of panama,

@fillippone are you sure that bitcoin became legal tender in Panama, as stated in the title of the topic?

Yes, this is great news but according to the research I did and the content provided by the OP. Bitcoin was not legal tender in Panama but it was signed and as a legal payment method.
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They never said Bitcoin was legalized as legal tender.

I am not so sure I am understanding this correctly, but even if the legislation that was passed at Panama seems to be very positive and favorable for bitcoin, it does not really give it legal tender status, bitcoin can be used as a currency and businesses are free to accept it, but it is optional, however if bitcoin was legal tender then businesses will actually be forced to do accept it, but in any case this is a good enough law and the fact that you do not have to pay capital gains on your bitcoin earnings will be very attractive especially for the whales that can relocate themselves to Panama.

It's important to note that legal tender is not possible in Panama as the constitution doesn't allow such status to any specific currency. In Panama we use the dollar (due to heavy American influence and economic stability) as our main currency but that doesn't mean it is legal tender.  Bitcoin will now be, in theory, in the same situation as the dollar. This law will not force any party to use anything unless they want to. Therefore, the adoption dynamics are going to be fully (in theory) dictated by the market.

In Panama things work in a slightly different way. I am following the developments over multiple channels (do you think my posts come out of copy and paste??), and this comment raised my attention, as it is pretty explanatory of the situation:

I am trying to double-check this information. Bear with me.

Use of the U.S. Dollar in the Republic of Panama

By express mandate of the Law, it is the obligation of every business, including banks, to accept US paper currency in all denominations.

In this regard, Article 1171 of the Fiscal Code establishes that:

Article 1171: The currency of the Republic of Panama will be the Balboa, which is a gold coin with a weight of nine hundred eighty-seven and a half milligrams (0.9875) and a purity of eight hundred twenty-nine thousandths (0.829), divided into one hundred hundredths (100/100).

The current United States Dollar and its multiples and fractions shall be legal tender in the Republic of Panama, with a face value equivalent to the respective Panamanian currency."

Too bad we don't have anyone from Panama active here (I guess) to clear this out.

https://www.reddit.com/r/Bitcoin/comments/ue8f8s/panama_bitcoin_bill_are_zero_taxes_better_than/i6mfu8d/?utm_source=share&utm_medium=ios_app&utm_name=iossmf&context=3

For now Wiki shows PAB and USD as currencies in Panama, but not Bitcoin.

I've also read today (but sorry, I cannot find it now) that the Bitcoin-as-legal-tender may have not passed yet?
Also the English text in OP tells:

Interesting, it seems that Panama is more into attracting the foreign investors rather than accepting the bitcoin locally.
~snip~

Echandi: We believe that they’re totally different efforts and they’re trying to solve completely different problems. El Salvador, we think, is a massive push toward Bitcoin adoption specifically, because it mandated adoption of bitcoin as legal tender. In Panama, that would be unconstitutional. We can’t force anyone to take a specific currency because we have monetary freedom established in the constitution.

I do share your doubts, and I agree in principle that the meaning of “legal tender” as known in the “civil law systems” is closely resembling to what you stated above: law imposes over the free will of individuals forcing them to accept a specific currency.

In Panama things work in a slightly different way.
...

(do you think my posts come out of copy and paste??)

I tried to find some more  info about status of US dollar in Panama and this is what I found on the website of some Panama bank, and similar thing (dollar being legal tender) is stated on Wikipedia (https://en.wikipedia.org/wiki/Panamanian_balboa). Too bad we don't have anyone from Panama active here (I guess) to clear this out.

They definitely have a different approach than El Salvador and they clearly define that in their strategy :


In other words, anyone who wants will be able to use Bitcoin completely legally, and this will by no means be an obligation, as is the case in the ES when it comes to all legal entities. Panama is likely to be much more attractive to investors because of its very favorable tax laws than Malta, Gibraltar, or perhaps Madeira, which each wants to become a kind of crypto paradise (or at least have had such plans in the past).

That's probably either a bad/outdated/conflicting interpretation of the law indeed. The constitution (which is the ultimate law of the land) currently says the following:

Article 262: "No habrá en la República papel moneda de curso forzoso" which roughly translates to "There won't be a forced paper currency in the Republic". This means that no specific currency shall be enforced.

Article 1171: The currency of the Republic of Panama will be the Balboa, which is a gold coin with a weight of nine hundred eighty-seven and a half milligrams (0.9875) and a purity of eight hundred twenty-nine thousandths (0.829), divided into one hundred hundredths (100/100).
If you pay close attention. This is specifically talking about a Balboa gold coin. This used to be a thing that was minted a while ago. I used to have one but it is very rare. This gold coin was not pegged to the dollar (clearly as that doesn't make sense). Maybe that's where the confusion is coming from. Also we technically call our currency Balboa but what we actually use is the US dollar. All our physical cash (with exception of some coins) is actual US dollars.

The current United States Dollar and its multiples and fractions shall be legal tender
This is the translation that was chosen probably due to its simplicity but it does contradicts the constitution. This probably just means that the dollar is legally allowed (but not mandatory) to be used. We need the current text (in Spanish) from the fiscal code to verify.

Too bad we don't have anyone from Panama active here (I guess) to clear this out.

Echandi: ~ We can’t force anyone to take a specific currency because we have monetary freedom established in the constitution.

So, we couldn’t even consider driving adoption in that manner. So, what’s the problem we’re trying to solve? First, we want people who deal with crypto to feel safe here, to provide a location that is open to the cutting edge of the internet. Second, if you’re creating a platform that is decentralized and taking custody of funds, the rules should be clear for you and they should be competitive. They should also mitigate the risks that normally exist with that. Third, if you’re doing something in the decentralized finance (DeFi) space, the rules should also be clear to you.

Keep remember Bitcoin is a freedom, anyone have their own choice to use or not. It's a right move from Panama giving an optional for businessman and their citizens to use Bitcoin. Take a look with El Salvador, even their president doesn't force them to use Bitcoin, but many people e.g. retires still protest against Bitcoin.

Yes, this is great news but according to the research I did and the content provided by the OP. Bitcoin was not legal tender in Panama but it was signed and as a legal payment method.
Read this message which was translated by the OP.
"Panama will venture into the legalized digital economy" and "This action of the deputies opens the doors to bitcoin (BTC) and cryptocurrencies, proposes to give legal stability to these digital elements, in addition, it is made explicit that the proposal does not oblige the use of bitcoin as a means of payment because it is presented in an optional"
They never said Bitcoin was legalized as legal tender.

Legalised of bitcoin was sounds good,but their was a doubt of how much it will works.Because the El people moves create this opinion to me.It was total twist in that country.The bad one of the El government was,they had forced to use of the bitcoin.But here panama had just make the bitcoin as a legal tender.So hope their will be some good response among the people of panama in the bitcoin price.

. Since 1904 one Balboa equals one US Dollar and since then, the US Dollar has legally circulated in Panama. In other words, in practice, the currency used day-to-day in Panama is the US dollar, which is also legal tender. For this reason, Panama is considered a dollarized country and was the second economy in the continent to become a dollarized economy. Currently there are Panamanian coins that have the same weight, dimension and composition of the coins used in the USA (1, 5, 10, 25 and 50 cents). Panama also has its own $1 coin. For paper money, only the US Dollar is used (there are no paper Balboas).

But I am only playing the guessing game here.

One thing, we had three countries to date, none of them had actually their own free floating currency, interesting pattern.

LE:
And of course, the price keeps dropping, the first time I was checking it today and as usual, again down -2,74% last 24h, I'm starting to wonder if we might need some country to ban bitcoin in order for it to go up!

Most likely, nothing will change much in Panama in the coming year. Perhaps within a few weeks after this news there will be some changes, but then everything will go into decline.

One thing, we had three countries to date, none of them had actually their own free floating currency, interesting pattern.

I wouldn't say that this kind of news is not good, but people have realized that it is no longer something that can move the market in a positive direction. On the other hand, a war that could escalate into anything more than a conflict between the two countries at any moment, and unstoppably rising inflation certainly affect the way investors think when it comes to investing in Bitcoin.

Does that mean Panama is only legalizing bitcoin as legal tender but not as legal currency?

Whatever the legality of bitcoin there, I think that is big news that needs to be welcomed by the "bitcoin" crypto community around the world. Over time adoption is getting better and this gives us hope about a good future to hold bitcoin for a long time. If Panama succeeds in doing so, then we can also expect other countries to follow suit in the near future.

Hopefully the steps taken by Panama are not too hasty and too pushy like El Salvador.

and after reading about panama above. it turns out that Panama is better in this way of administering bitcoin.

while in el salvador the approach was too sudden and led many of the citizens to take to the streets and refuse. although it's only a matter of time until the citizens accept this bitcoin adoption. behind the good news for bitcoin, it turns out that there are problems that are not good in el salvador itself for its citizens who do not understand cryptocurrency.

The Latin American country approved bitcoin along with eight other cryptocurrencies as legal tender within the country. Accepted cryptocurrencies include BTC, ETH, XRP, LTC, XDC, EGLD, XLM, IOTA, and ALGO. Panama isn't the first Latin American country to adopt bitcoin, there is more news mentioning the adoption of Panama to be more potential than the one by the Latin American country El Salvador.

It is stated that El Salvador, which only recognizes Bitcoin (BTC), Panama is introducing regulations for a total of nine cryptos, including Bitcoin which makes it more effective. As part of the regulation there is no capital gains tax. Businesses in Panama have been given the access to accept bitcoin and it isn't mandate according to the regulations. More good things happening in Panama and the same needs to get spread around.

Where are you getting those dumb-ass talking points Lubcub62?  Did you come up with them on your own?

Some of the foundational simplicity aspects of El Salvador's law was holy shit amazing, and yeah of course, there are frequently going to be implementation issues and surely not everyone is going to agree either, but I doubt that there was as much opposition to the law as what is being portrayed in various mainstream renditions  - or that even the opposition that actually does exist in El Salvador have been opposing on grounds of actually understanding what bitcoin happens to be.  

I am not even going to suggest that there would NOT be concerns regarding various implementation concerns in El Salvador or that there are not various risks and/or problematic areas - including custodial issues.. and even potential power transition issues, including who's holding the value.

Surely, this thread is about Panama and Panama has a different take - including some aspects that may well seem to be way more receptive to various shitcoins being treated similarly to bitcoin, and likely we are still quite early in terms of watching how Panama implements and the extent to which Bitcoin might end up being increasingly used and/or held within it's jurisdiction.  For sure, there can be many benefits in terms of seeing how various earlier jurisdictions vary in the way that they start to allow for bitcoin within their jurisdictions - and  perhaps various gold standards (or Lindy effects) will start to show themselves with the passage of time.. but we do seem to be in pretty damned early stages, and I already anticipate that some jurisdictions might well end up having rug pulling actors that end up contributing to ongoing learnings, but also some possible early-stage growing pains.. that had previously been done at more individual levels then transitioning to large institutions and governments carrying out some behaviors that we had seen in earlier times through individuals, smaller and more simplistic players.

i read a lot of news about this el salvador. and some even made a topic about this el salvador. on this bitcointalk forum.

and just now I found for you a topic that discusses the intricacies of adopting bitcoin in el salvador.
here is the link :Why has bitcoin adoption failed in El Salvador? (https://bitcointalk.org/index.php?topic=5396392.msg59985558#msg59985558) .

but apart from that. I really appreciate countries that dare to take such a step forward even though they have to face various risks that are quite difficult. but I believe the countries that take the step of adopting bitcoin will be the ones that continue to grow forward in the future. because they have far-sighted thoughts into the future.

Fair enough that you may well believe some of the El Salvador critical contents of your earlier post.

In any event, I will stand by the content and assertions that I already made within my response post, yet I had not seen that Ratimov thread that you linked above, so I will try to look at that thread later (hopefully within the next week)..

I placed a tab of that Ratimov thread in my "get to it later" section (note: sometimes I have lost my "get to it later" tabs.. so I cannot promise for sure that I will succeed to read through that thread soon).. ..

I doubt that anyone reasonably could proclaim that Panama is "more effective" than El Salvador because they are more shitcoin inclusive. Opinions definitely are going to differ on that angle, and surely government choices end up being a balancing of interests that may or may not end up with anything close to perfection or even sometimes questions regarding whether policy changes or implementations actually end up adequately reflecting the balancing of constituents or the interests that they might be attempting to serve, and I am attempting to be more descriptive rather than judgmental.

Ultimately, I would concede that Panama's way of recognizing bitcoin (as well as other forms of crypto currencies/assets - aka shitcoins**) will cause it to have differing dynamics, and whether future jurisdictions gravitate more towards Panama's way or El Salvador's way is still to be seen - or maybe Panama and El Salvador end up learning from each other and move more towards the middle (or some hybrid version of their current selves)?

Its really interesting phenomenon. The countries which were in the backdrop pf international economic scene are the early adaptors of bitcoin as they are trying to solve their own unique economic challenges with bitcoin. These countries are taking calculated risk, they know that over time the bigger economies will adopt bitcoin and this will significantly increase the value of their holdings in future. But the larger economies are following same stand. All of them too weary, cautious and in line of their common understanding. Wait and watch
Anyways kudos to panama for being early adopter, this will go long way in strengthening your economy

Panama has considerably small population so implementing this kind of initiative is not hard to communicate with its people. It is relatively a small country as well so it is not very hard to see the impact of this move. Big countries are too cautious because there's a lot at stake. But with countries like Panama, they can try a bold move and if they failed, they can easily go back to where they are. I am guessing, more and more smaller countries will take a dip in crypto market. And see if there will be changes when it comes to their economic status.

Has this been signed into a law already? I have yet to read a news stating that this bill has already passed into a law. I think this remains to be a bill until today as President Cortizo has yet to affix his signature on it.

Has this been signed into a law already? I have yet to read a news stating that this bill has already passed into a law. I think this remains to be a bill until today as President Cortizo has yet to affix his signature on it. So we will know in the coming days if this will be approved or vetoed or will be resubmitted to congress for specific amendments before being reconsidered.

So far what is clarified is that Bitcoin is not to be declared as a legal tender in the country, but a lawful currency which is to be accepted in private transactions as well as in government transactions such as paying taxes.

It remains interesting to know how the likes of XDC Network, Elrond, Stellar, IOTA, Algorand, and others have been included in the proposed law and whether they will pass the review of the president. 

These will increase in number no doubt. All the poor nations of the world will see bitcoin as a way to get out of trouble, I mean even dollar loses value and it is one of the biggest reserves in all of the world, probably the biggest ever as well. If bitcoin is used instead of dollars, then we could have reserves that gain value while staying there and that would be very helpful to pay the debts and that will be amazing.

These will increase in number no doubt. All the poor nations of the world will see bitcoin as a way to get out

 It is true that some small countries legalize bitcoin not only to avoid inflation of the petrodollar but also to attract crypto investors to open up crypto-related businesses there.

These will increase in number no doubt. All the poor nations of the world will see bitcoin as a way to get out of trouble, I mean even dollar loses value and it is one of the biggest reserves in all of the world, probably the biggest ever as well. If bitcoin is used instead of dollars, then we could have reserves that gain value while staying there and that would be very helpful to pay the debts and that will be amazing.

I believe that we could turn a poor nation into a decent nation if they end up buying more and more bitcoin instead of using that money to buy dollars or something else. At the very least it would profit them over dollars at the very least.

Panama has decided to postpone the legalisation of digital assets. According to multiple sources, Panamanian President Laurentino Cortizo has stated that he will not sign the crypto bill. The president stated in the statement that the only way for a reversal to occur is for the crypto bill to include measures that will prevent money laundering in the sector. This move has exchanges and people scrambling to get into the market as soon as the bill is approved.

A cold shower is coming for those of you waiting for an immediate domino effect to Panama. The president wants all the checkboxes ticked before approving the crypto Laws.

Panama has decided to postpone the legalisation of digital assets. According to multiple sources, Panamanian President Laurentino Cortizo has stated that he will not sign the crypto bill. The president stated in the statement that the only way for a reversal to occur is for the crypto bill to include measures that will prevent money laundering in the sector. This move has exchanges and people scrambling to get into the market as soon as the bill is approved.

To be honest, Panama is not famous for its strict AML/KYC measures. Still, the president probably recognises the stakes are pretty high here, as the cost of a "reaction" from other regulators could be detrimental to the country's interests.

After el savador successfully accepted bitcoin, now other latin american countries, namely panama, of course this is an idea that has gone through a long process, and i'm sure that panama will continue to develop into an influential economic power after legalizing bitcoin.

After el savador successfully accepted bitcoin, now other latin american countries, namely panama, of course this is an idea that has gone through a long process, and i'm sure that panama will continue to develop into an influential economic power after legalizing bitcoin.

After el savador successfully accepted bitcoin, now other latin american countries, namely panama, of course this is an idea that has gone through a long process, and i'm sure that panama will continue to develop into an influential economic power after legalizing bitcoin.

i want to understand this thing fully, this panama does it mean that they have legalized cryptocurrency as a tender or they are still with the process of legalizing cryptocurrency as a legal tender. Because i know very well that bitcoin is not generally accepted to every nation, some countries is still scrutinizing if the adoption will be world recognized or not before they will follow another way of making it a legal currency. Bitcoin is a currency so many countries government hate, but I'm surprised after campaigning wrong about bitcoin Salvador still accept it

There are still debates about bitcoin used for fraudulent activities and also the volatility is so much questionable because we experience a heavy ones which exist at the moment maybe this is one of the reason why we see a hard time for cryptocurrency to became a legal tender on 1st world countries. But since Panama is already almost into it now maybe lets just see the result because if this could give positive effect to them maybe this is one of the ladder for other 1st world country to also do it.

This way is much better than forcing it on the people of panama, btc despite being around for more than a decade is still a new tech to a lot of people, some are still struggling to understand the whole concept and how to use it.
with this option in place, those who feel comfortable and understand it enough will begin to accept it as part of their payment option. one step at a time, for now smaller countries are taking the bold step. Hopefully in the near future some of the big countries will pick up the slack.

I couldn't agree with you more but at the end of the Day, whether El Salvador forced it on the citizens or not, we must continue to give El Salvador the praises that they deserve because they Boldly and courageously took that first leap which others are learning hopefully from their "Mistakes" I believe it is great news all around and Panama being a tourist destination will definitely have an impact mostly on people that haven't already understand Bitcoin and Cryptocurrency in general.