President of Panama shoots down crypto bill citing FATF guidelines

Panama’s President Laurentino Cortizo has partially vetoed Bill No. 697, dubbed the “crypto bill,” saying it requires more work to better fit Panama’s financial regulations.

President Cortizo previously warned in May he wouldn’t sign the bill unless it included additional Anti-Money Laundering (AML) rules after Panama’s National Assembly passed the crypto bill in late April 2022.

Local media outlet La Prenda obtained a copy of the 32-page veto, reporting the president wrote it’s “imperative” the cryptocurrency laws conform to new regulations recommended by the Financial Action Task Force (FATF) outlining “fiscal transparency and prevention of money laundering.”

President Cortizo has previously described the legislation as an “innovative law,” and indicated approval of certain aspects of the bill but has said possible illicit uses of cryptocurrencies needed addressing.

Congressman Gabriel Silva who helped introduce the bill in September 2021 tweeted on Thursday that (according to a translation) the veto was “a lost opportunity to generate jobs, attract investment and incorporate technology and innovation in the public sector.”

El Presidente acaba de vetar parcialmente el proyecto de Ley de CryptoUna oportunidad perdida para generar empleos, atrae inversión e incorporar tecnología e innovación en el sector públicoEl país merece más oportunidades y también inclusión financiera (1/2)

“The country deserves more opportunities and financial inclusion,” Silva added, saying Congress will study the veto to make corrections which will then be passed through to debates.

Related: Top 30 Panama Bank is ‘Bitcoin friendly,’ welcomes crypto services

If the bill is eventually signed, it will make Panama the second Central American country to regulate the spending of cryptocurrencies. The nearby country of El Salvador was famously the first country to make Bitcoin (BTC) a legal tender.

Unlike El Salvador, however, Panama’s bill covers other cryptocurrencies besides Bitcoin and wouldn’t require local businesses to accept digital assets.

According to the bill Panamanians “may freely agree on the use of crypto assets, including without limitation Bitcoin and Ethereum” as an alternative payment for “any civil or commercial operation.”

The bill would also cover the issuance of digital value and regulate the tokenization of such things as precious metals. Digitization of identity using blockchain or distributed ledger technology would also be researched by the government’s innovation authority.