IIn Panama, parliament on Thursday approved a law regulating the use and marketing of cryptocurrency assets. In this Central American country, known as a hub for offshore financial services, this allows the private and public use of cryptocurrencies such as Bitcoin, for example to pay taxes.
The law is broader than that of El Salvador, which made bitcoin cryptocurrency legal tender last year. Not only cryptocurrencies themselves should fall under the law, but also other digital assets such as so-called tokens. It is a digitized form of an asset, such as real estate, precious metals or works of art. The property is digitally mapped and can therefore be traded. Under the new legislation, Panamanians can also use crypto assets as a form of payment.
Financial experts have warned that a law introducing cryptocurrencies could further bolster Panama’s reputation as a financial hub lacking in transparency, as cryptocurrency exchanges are difficult to trace and circumvent the processes required by organizations. international. Panama is already on the European Union’s list of tax havens and has a dubious reputation. Despite concerns, President Laurentino Cortizo is expected to sign the law, which was unanimously approved by parliament.
Latin America leads the way
After El Salvador and now Panama, other Latin American countries are expected to regulate the use of cryptocurrencies soon. Corresponding discussions are ongoing in various countries, including Brazil and Mexico. The aim is also to prevent the criminal use of cryptocurrencies for money laundering or evasion or to fund organized crime. Even without legal regulation, the use of cryptocurrencies in Latin America has increased significantly in recent years. Between 2019 and 2021, usage in Latin America grew nearly 1400%, according to Chainanalysis. In 2021, more than $500 billion worth of cryptocurrencies were traded in countries in the region.
For many Latin Americans, cryptocurrencies have a very practical use. Half of Latin Americans are unbanked, but virtually everyone has a cell phone and Internet access. However, in El Salvador, where Bitcoin can be used as a form of payment, day-to-day usage is limited. This changes in the case of families who have relatives abroad. Remittances are an important source of income for many families and economies in the region. In El Salvador, for example, they contribute about 24% to the gross domestic product. Transfers using bitcoin or other cryptocurrencies are much cheaper than traditional services. According to service provider Coinpay, transfers using cryptocurrencies in Latin America increased by 900% in 2021.
Venezuela has also contributed, where five million people have left the country in recent years. Many are turning to cryptocurrencies to send money to their families back in Venezuela. Last year, the country was one of the countries with one of the highest adoption and usage rates. Likewise in Argentina, where the reason is seen more in the devaluation of the currency. Argentines are storing less and less of their savings in dollar bills under their mattresses, resorting instead to crypto wallets.