Panama President Vetoes Cryptocurrency Bill Citing FATF Guidelines

Panamanian President Laurentino Cortizo has partially vetoed Bill 697, dubbed the “Cryptocurrency Bill,” saying more needs to be done to better comply with Panama’s financial regulations.

After Panama’s National Assembly passed the cryptocurrency bill in late April 2022, Cortizo had warned in May of this year that he would not sign the bill unless it contained more anti-money laundering rules.

A copy of the 32-page veto, obtained by local media La Prenda, reports that the president wrote that cryptocurrency laws “must” comply with new regulations proposed by the Financial Action Task Force (FATF) that outline “fiscal transparency and prevent money laundering".

Cortizo has previously called the legislation an "innovative law" and said it would approve some aspects of the bill, but said it needed to address possible illicit uses of cryptocurrencies.

Congressman Gabriel Silva, who helped introduce the bill in September 2021, tweeted on June 16 that the veto (according to a translation) was a "lost opportunity to create jobs, attract investment, integrate technology and innovation in the public sector .”

"This country deserves more opportunity and financial inclusion," added Silva, who said Congress would study the veto and make amendments before submitting it for debate.

If the bill is eventually signed, Panama will become the second Central American country to regulate cryptocurrency spending. Nearby El Salvador is known to be the first country to adopt Bitcoin (BTC) as legal tender.

However, unlike El Salvador, Panama’s bill covers cryptocurrencies other than bitcoin and does not require local businesses to accept digital assets.

According to the bill, Panamanians “are free to agree to use crypto assets, including but not limited to Bitcoin and Ethereum,” as an alternative payment method for “any civil or commercial operation.”

The bill would also cover the issuance of digital value and regulate the tokenization of items such as precious metals. The government's innovation authority will also look into the use of blockchain, or distributed ledger technology, for the digitization of identities.