Bitcoin for Taxes? Panama City Leads Latin America Into a Crypto Future

The Panama City Council has set a precedent by becoming the first Latin American government institution to accept crypto payments for public services.

According to Mayor Mayer Mizrachi’s announcement on the social media platform X, the city will allow citizens to pay their fees, taxes, tickets, and permits using BTC, ETH, USDC, and USDT.

The Mayor stated that Panama City Council had partnered with a local bank to facilitate receiving crypto payments for public services before converting them to US dollars on the spot, enabling a hassle-free flow of digital assets into the entire government and economy. The Mayor stated:

“Panama City council has just voted to become the first public government institution to accept crypto payments. Citizens can now pay taxes, fees, tickets, and permits entirely in crypto, starting with BTC, ETH, USDC, and USDT.”

Exploring the Potential of Blockchain

Congressman Gabriel Silva observed that the concept of adopting Bitcoin payments was to allow Panamanians to buy everyday goods with cryptocurrency if they wanted to. He stated that the decision highlighted the growing sentiment towards crypto adoption in several other cities worldwide. Silva reiterated that the Panama City Council was joining other municipalities keen on exploring blockchain technology’s potential for public finance.

When Salvadoran President Nayib Bukele led the world by adopting Bitcoin as a legal tender in El Salvador, Panama started following in those footsteps when Congressman Silva introduced a legislative bill seeking to regulate the use of digital assets.

He then stated that the Panamanian government wanted to make the country compatible with the Internet, blockchain technology, and cryptocurrencies. Besides passing the law to regulate cryptocurrencies in Central American countries in 2022, Panamanian President Laurentino Cortizo vetoed the initiative and sent the laws back to parliament for further discussion.

Panama as a Leading Crypto Hub

Mayor Mizrachi said:

“Prior administrations tried to push a bill in the Senate to make this possible, but we found a simple way to do it without new legislation. Legally, public institutions must receive funds in $, so we partner with a bank that will take care of the transaction—receiving in crypto and converting on the spot to $. This allows for the free flow of crypto in the entire economy and government.”

In addition to the bill positioning Panama as a leading crypto hub in Latin America through the legislation allowing Panama City Council to accept crypto payments for public services, legislators have also introduced a bill to establish a legal framework for other blockchain-based services.

The bill discusses the required licensing requirements to enable Virtual Asset Service Providers (VASPs) to register with the country’s regulator, the Financial Analysis Unit (UAF), and adhere to Know Your Customer and anti-money laundering regulations.

Conclusion

If passed into law, the Panama City Council could become the first municipality in Latin America to embrace digital finance. While no exact date has been mentioned for Bitcoin payments to start, the Mayor said plans are in place to build the infrastructure to make it work, showing the government’s willingness to modernize without breaking the system.

Frequently Asked Questions (FAQs)

Why are governments embracing cryptocurrency?

Governments are considering crypto as a hedge against inflation or a means of insulating value over the long term. Others intend to attract industry startups and investment by demonstrating their receptivity to new ideas.

Which country in the world has the highest crypto adoption?

According to statistics, India and Nigeria lead globally in crypto adoption, followed by Vietnam, the United States, Indonesia, the Philippines, and Ukraine.

Why are crypto users concerned about government crypto regulation?

Many users in the cryptocurrency industry believe in the benefits of increased oversight. However, there are concerns that regulating crypto could have drawbacks, such as restricting market access.

Appendix: Glossary to Key Terms

Crypto: A digital currency using cryptography to secure transactions.

Legislative bill: A proposal to introduce new legislation or amend or repeal existing law.

Veto: Exercise a right to reject a decision or proposal made by a lawmaking body.

References

Mayor Mayer Mizrachi

 

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