After El Salvador’s move to give Bitcoin a legal tender, the National Assembly of the Central American country, Panama, passed a bill on Thursday to enact regulations for the commercialization and use of cryptocurrency in the republic. 

If the President of the National Assembly, Laurentino Cortizo, approves the bill, private and public companies would be allowed to use the digital assets alongside officials making way for them to pay taxes in cryptos. At the same time, experts warn the legislative branch that adding digital assets could disrupt the country’s reputation for lacking financial transparency.

Related Reading | Nepal Issues Warning; Shuts Access To Crypto Gambling And Other Apps

“The bill in question contains broader legislation than El Salvador’s applied measures, which in June 2021 gave Bitcoin a legal tender,” said Gabriel Silva, the promoter of the bill and independent lawmaker. “The legislation is broader in scope than measures passed by El Salvador, which made bitcoin legal tender last year.”

He added:

We’re seeing the emergence of many different types of crypto assets like works of art. That’s why we didn’t want to limit ourselves only to cryptocurrencies.

As the proposed bill has a broader scope, it covers trading, the use of cryptocurrencies alongside its addition to the payment system, and the issuance of digital securities. Besides, it also includes tokenization of the precious metals, which refers to converting a physical asset into a digital format.

In line with the new law, the people of Panama will use cryptocurrencies as a payment medium to conduct commercial or civil operations under the regulation rules applied in the state.

Expert Warns Panama To Not Add Crypto

Panama currently stands as one of the tax haven countries on the list of the European Union. Given that, the Chief Executive Officer of the investment advisory firm K&B Family Office, Romain Dromard, criticized the bill in support of cryptocurrency, saying crypto would not allow the state to keep financial transparency.

He stated;

Panama was already in a bad position and these payment methods skip the due diligence processes that international organizations are asking Panama to embrace.

Before the bill moves forward to President Laurentino Cortizo for final signature, 38 members of the assembly have already voted in favor of the bill with two abstentions. Notably, no one voted against it.

In Panama, one person owns a bank account out of four, while internet penetration is high in the country. Given that, crypto assets would help unbanked to increase their business, argued Belisario Castillo Saenz, CEO of the tokenization firm Feanor Corp.

Related Reading | Telegram Rolls Out Crypto Payment Via Chat

Similarly, Jose Fabrega from the blockchain and crypto service CryptoSPA said that the bill could make the banks, who have mainly prevented the crypto use, more cooperative.

While Dromard of K&B pointed out it will take years for traditional companies to use blockchain technology, banks’ role is also unclear for now. In addition,  he said that small and medium-sized businesses would not be allowed to switch on the blockchain due to the highly volatile nature of cryptocurrencies.