Bitcoin Legal Tender in Panama

[fillippone]

Is this a deja-vu? These threads are becoming more and more every day!

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



Panama is an exciting country for bitcoiners because of... reasons.

Actualidad, 28 Abril, 2022 DAN VIDA JURÍDICA A LA CRIPTOMONEDA Por Bienvenido Mojica / Fotos Erick Santos Panamá incursionará en la economía digital legalizada en la iniciativa de Ley 697, que regula la comercialización y el uso de criptoactivos.   La norma que regula la comercialización y uso de criptoactivos, la emisión de valor digital, la tokenización de metales preciosos y otros bienes y los sistemas de pagos será factible por la decisión del Órgano Legislativo de aprobarla en tercer debate.   Esta accionar de los diputados abre las puertas al bitcoin (BTC) y a las criptomonedas, propone darles estabilidad jurídica a estos elementos digitales, además, que se hace explicito que la propuesta no obliga al uso de bitcoin como medio de pago porque se presenta de forma opcional.   En ese sentido, se planteó que si el comercio quiere la cripto la puede recibir y no existirá problema alguno. Por ello, el Banco Nacional de Panamá actuará como ente supervisor de la actividad.   El proyecto de ley fue producto de una fusión de las iniciativas que emanaron de los diputados Cenobia Vargas y Gabriel Silva.   Para entender, el proceso, hubo docencia al indicar que cualquier ciudadano con un celular podrá descargar una aplicación y desde allí realizar transferencias.   También se abren las puertas para que empresarios internacionales o locales inviertan en diferentes sectores del país.

News, April 28, 2022 GIVE LEGAL LIFE TO THE CRYPTOCURRENCY By Welcome Mojica / Photos Erick Santos Panama will venture into the legalised digital economy in the initiative of Law 697, which regulates the commercialisation and use of crypto assets.   The norm that regulates the commercialisation and use of crypto assets, the issuance of digital value, the tokenisation of precious metals and other goods and the payment systems will be feasible by the decision of the Legislative Body to approve it in the third debate.   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.   In this sense, it was suggested that if the business wants the crypto, it can receive it, and there will be no problem. For this reason, the National Bank of Panama will act as the supervisory entity for the activity.   The bill resulted from a merger of the initiatives that emanated from deputies Cenobia Vargas and Gabriel Silva.   To understand the process, there was teaching by indicating that any citizen with a cell phone can download an application and, from there make transfers.   Doors are also opened for international or local entrepreneurs to invest in different sectors of the country.

https://www.asamblea.gob.pa/noticias/dan-vida-juridica-la-criptomoneda

This is the initiative of Law 697:


That Law is well known amongst bit coiners:

INTERVIEW: DISCUSSING PANAMA’S CRYPTO BILL WITH ITS ARCHITECTS

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.

Panama Cheatsheet:

Panama on Wikipedia
Panama on CIA World Factbook

[macson]

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.

[Scripture]

I think I already see a thread like this, or its just another country?
Anyway, this is a good news in Panama where crypto investors can easily use their Bitcoin to buy anything they want since its already legal. Panama serves an important role in sea shipments/tourist cruise, they might also introduce this on collecting fees, well this is a good start. Educating more people about Bitcoin should also be the concern, hoping to see more countries to make Bitcoin as a legal tender.

[KennyR]

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.

It is good for the country residents, and the population of the country is 4+million. With the adoption of bitcoin the economic conditions will strengthen. As for now there is no proper income distribution. Almost 55% of the income goes into the hands of 20% of the richest residing in the country. It holds the high human development index with which we can expect good number of people using bitcoin compared to the countries that have adopted bitcoin earlier. Majority of the population resides in the rural regions which shows that job is accumulated in specific regions. The adoption is also aimed with more jobs, let's see what all things gets fulfilled through this new law passed.

[Silberman]

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.

[Oluwa-btc]

That's too say Panama officially becomes a legal tender after El Salvador, Central African Republic both.
Great move as we await world wide Bitcoin adoption. What I don't like is using Crypto for Bitcoin which I know very well are not same.
Anyways congratulations to Panama, Citizens can now download the App and make transfer of transactions.

[Smartvirus]

Apparently @OP, its become a trendy in recent times with Central Africa, Russia and Ukraine  before the war and now, Panama as you have it. Even at that, we still get news of the fail of bitcoin in El-Salvador that all started this adoption. I don't know if I'm to get a mixed feeling about this as, orher nations just wants to try it out to see if it would work or them or they've got a hidden agenda to adopt and the  rub it in the mud as something that doesn't work.
Which ever it is, I would still continue to use bitcoin and I'm sure these serious of adoptions is sure to help someone find some usefulness in the system.

[kawetsriyanto]

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.

[suzanne5223]

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.

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.

[so98nn]

Interesting, it seems that Panama is more into attracting the foreign investors rather than accepting the bitcoin locally. I mean if you read the quotes then they are focusing on “opening the doors for foreign investors” through bitcoin channel which is obvious to increase Money flow. I assume they have plans for this because fiat is something that exists and yet businesses not crossing the borders freely. This could be just nominal thought. But as they said the key difference between El Salvador who is more focused on bitcoin being the currency of locals, Panama stands out for investor based relation. Would be interesting to see how it works out.

[avikz]

Panama has been a tax heaven for the rest of the world since a long time. Multiple billionaires and millionaires use Panama to channel out their money to various shell companies so that those can be invested abroad and create fortune for the riches. It's good that Panama has finally added cryptos to the available list of avenues.

Small countries like Panama, El-Salvador, Curacao don't have infrastructure to build factories and can't produce mass employment. This is how they try to make money themselves. Good progress!

[Don Pedro Dinero]

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.

[mk4]

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

Highly likely that you just saw one of those "X country/state planning on making bitcoin legal tender"; we've had a good number of those lately, as I'm guessing some countries are trying to join in on the hype. At least this one seems to be official.

[Rikafip]

@fillippone are you sure that bitcoin became legal tender in Panama, as stated in the title of the topic? I am asking this because in that text that you linked its stated that businesses may accept bitcoin, but are not forced to do it. From what I know, if some currency  is legal tender that means business have to accept it, they can't refuse it like its the case here. I mean, its still good news nevertheless and one step forward, just wanted to clear that out.

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.

How is that a bad thing exactly, people using bitcoin for what is initially intended for?

[Bitstar_coin]

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.

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.

[Dunamisx]

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.

Don't mind them this is just a captivation to gain the interest of the people trust me government will only support what it will benefit from and i believe they will levied the tax later after the adoption would have been circulated, this is politics they want to bring into bitcoin and it will not work, because we all know how they have been taking the issue of task with all seriousness, and as for Panama, i want to congratulate them for making it to the third place in adoption of bitcoin for payment in businesses but they have to make that in an official statement that will indicate the claim "legal tender" in other to clear all doubts and  i see more countries following as well.

[Apocollapse]

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

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.

[fillippone]

@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.
<…>
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.

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. 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:

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.

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

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

[Rikafip]

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:

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.

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

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

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."

[fillippone]

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

The best thing I could think of was to post your question in the Reddit thread and ask that to the user who posted the original content.
I will post it the answer here.