Move to Regulate Virtual Assets: Key Legislative Update

Panama is taking proactive steps to integrate virtual assets into its economy while tightening regulatory oversight to meet international standards. Our clients should be aware of a significant development in the National Assembly concerning Bill 326.

Comprehensive Framework for Virtual Assets

The Economy and Finance Commission recently discussed Bill 326, a legislative initiative that seeks to establish a comprehensive legal framework for the supervision, registration, and control of Virtual Asset Service Providers (VASPs).

This move is dual-purpose:

Economic Recognition: The Bill formally aims to recognize the use of cryptocurrencies in the Panamanian economy, fostering an environment for innovation in digital technology, finance, and business.

Regulatory Compliance: Crucially, it mandates that the oversight of VASPs conforms to International Standards for the Prevention of Money Laundering (AML) and Terrorism Financing (CFT).

Strengthening AML/CFT Compliance

The primary driver behind this legislative push is the need to bolster Panama's defenses against illicit financial activities. As stated by the bill’s proponents, the law is designed to strengthen measures against money laundering, terrorism financing, and the proliferation of weapons of mass destruction.

This alignment is critical: by following the recommendations of the Financial Action Task Force (FATF/GAFI), Panama intends to secure its international reputation and avoid being placed on international black lists.

What’s Next? Technical Working Group

While the intent is clear, the bill is not yet law. Following the commission's discussion, Bill 326 has been sent to a sub-commission to establish a technical working group. This group will include various linked entities to ensure a well-vetted and practical framework.

This means the bill is progressing, but its final form is still being negotiated among key stakeholders.

Implications for Industry Participants

For players operating or planning to operate in Panama’s fintech sector, particularly those dealing with virtual assets, this bill signals an impending shift toward formal regulation and stricter compliance requirements.

We are closely monitoring the developments of Bill 326 and the subsequent recommendations of the technical working group. Businesses in this space should prepare for new registration requirements, enhanced due diligence protocols, and robust AML/CFT systems once this legislation is enacted.