Major Blow To Panamanians As President Vetoes Crypto Regulation Legislation

Panama’s President Laurentino Cortizo has shot down a previously approved pro-crypto bill that would allow citizens to use cryptocurrencies as a means of payment and make the Central American nation compatible with DAOs.

According to the local media house La Prensa, Cortizo made the decision to partially veto the bill on the grounds that it should conform to the new regulations advised by the Financial Action Task Force (FATF) defining “fiscal policy and prevention of money laundering”.

The crypto legislation — introduced by the independent Panamanian Congressman Gabriel Silva and approved during a session of the Legislative Assembly in late April — will now go back to the country’s legislature for corrections in sections that are unsatisfactory in the current state before passing through debates.

President Cortizo previously described the bill as a “good law”, but wanted assurance that potential illegal uses of crypto assets would be addressed — suggesting he wouldn’t sign it into law immediately given the information he had at the time.

“I have to be very careful if the law has clauses related to money laundering activities or anti-money laundering activities. That is very important for us,” he told Bloomberg in a May interview.

Although the new legislation doesn’t allow making any cryptocurrency legal tender, it wants to let Panamanian citizens freely purchase goods with digital assets. Crypto assets like bitcoin and ethereum would be a legal “means of payment for any civil or commercial operation”, including the payment of taxes and other tax obligations.

According to Congressman Silva, the veto move was a “lost opportunity to generate jobs, attract investment, and incorporate technology and innovation in the public sector. The country deserves more opportunities and also financial inclusion.”

If the legislation is eventually enacted, it will make Panama the second Latin American country to regulate crypto spending. The neighboring country of El Salvador made history in 2021 as the world’s first country to adopt bitcoin as legal tender.