Quick Answer
Cryptocurrency is legal but largely unregulated in Panama.
- Panama currently lacks a specific legal framework for digital assets.
- However, crypto businesses must comply with existing AML/KYC regulations.
Legal Status of Crypto in Panama
Cryptocurrency in Panama currently operates in a legal gray area; while not illegal, it exists without a specific, comprehensive regulatory framework. This ambiguity stems from the lack of dedicated crypto legislation, as past bills have been vetoed or remain under review by the National Assembly, and financial regulators like the Superintendence of Banks have clarified that digital assets fall outside their direct authority. Despite this, businesses dealing with virtual assets must adhere to Panama's existing anti-money laundering (AML) and know-your-customer (KYC) requirements, with the Financial Analysis Unit (UAF) overseeing compliance.
Current Regulations
Panama does not have a comprehensive national regulatory framework specifically for cryptocurrencies, creating what some legal experts call a legal “grey area.” Financial regulators, including the Superintendence of Banks and the Superintendence of the Securities Market, have issued non-binding statements clarifying that digital assets are outside their direct competence and are not considered securities. However, the regulatory landscape is evolving, with a new draft bill under review in the National Assembly that aims to establish licensing requirements and formalize the use of crypto for payments.
Regulatory Authorities
While no single body exclusively regulates cryptocurrency, several authorities oversee compliance within their respective domains, primarily through anti-money laundering (AML) regulations.
- Financial Analysis Unit (UAF): As Panama's main AML enforcement body, the UAF is responsible for collecting and analyzing suspicious transaction reports from virtual asset service providers. Crypto businesses are required to register and report suspicious activity to this unit to ensure compliance.
- Superintendency of Banks (SBP): The SBP supervises AML compliance for the banking and financial services sector. Although it has stated that cryptocurrencies are outside its direct competence, it would oversee any crypto business that offers services similar to traditional banking.
- Superintendency of the Securities Market (SMV): This authority regulates the securities market, including broker-dealers and investment advisors. While the SMV has opined that crypto is not a security, it would enforce AML compliance for any crypto business offering products that are classified as securities.
- Intendencia de Supervisión y Regulación de Sujetos No Financieros: This body oversees AML compliance for designated non-financial businesses and professions (DNFBPs), such as real estate and legal services. A crypto business could fall under its supervision if its activities are categorized within the DNFBP framework.
Historical Context
Panama's approach to crypto regulation has evolved from passive observation to active legislative engagement. Before 2021, the country lacked specific rules, with financial regulators clarifying in 2018 that digital assets were outside their purview. A key policy shift occurred in 2021 with the introduction of a bill to create a legal framework for crypto. However, progress was uneven, as a separate crypto bill was vetoed by the president in 2022. Momentum renewed in early 2025 with a new draft bill to regulate crypto payments and service providers. This legislative push, alongside Panama City accepting crypto for public services, highlights a significant move toward formalizing the industry.
Compliance Requirements for Businesses in Panama
Businesses operating in Panama, including virtual asset service providers, must adhere to a robust anti-money laundering (AML) and counter-terrorist financing (CTF) framework. This framework, primarily established by Law 23 of 2015 and its subsequent updates, aligns with international standards set by the Financial Action Task Force (FATF). Key compliance obligations include:
- Risk-Based Compliance Program: Companies must implement a formal AML/CTF compliance program tailored to their specific risks. This includes appointing a dedicated compliance officer, conducting regular risk assessments and internal audits, and providing ongoing training for all relevant staff.
- Customer Due Diligence (CDD): A cornerstone of Panamanian AML rules, CDD requires businesses to verify a customer's identity using official documents, understand the purpose of the business relationship, and identify the ultimate beneficial owners (UBOs) of any legal entities.
- Enhanced Due Diligence (EDD): For higher-risk scenarios, such as dealings with Politically Exposed Persons (PEPs), clients from high-risk jurisdictions, or complex corporate structures, businesses must conduct deeper investigations into the client’s background and source of funds.
- Suspicious Transaction Reporting (STR): All regulated entities are required to continuously monitor transactions and report any suspicious activity to the Financial Analysis Unit (UAF). Reports must be filed within 15 working days of detection, and there is no minimum monetary threshold for reporting.
- Record-Keeping: Detailed records of all customer due diligence activities and transactions must be maintained for a minimum of five years. These records must be available for review during audits or official investigations.
- Beneficial Ownership Disclosure: Following a major regulatory reform in 2021, companies are now required to disclose their ultimate beneficial owners to a central registry, significantly increasing transparency.
Why this matters for Cross-Border Payments
For businesses managing cross-border payments between Panama and India, this regulatory environment creates a dual compliance challenge. Companies must simultaneously satisfy Panama's stringent AML/KYC obligations while navigating India's own complex foreign exchange and digital asset regulations. This friction often translates into significant operational pain points, including increased transaction scrutiny, potential payment delays, and the risk of navigating conflicting compliance demands from financial institutions in both jurisdictions.
How Lightspark Enables Compliant Crypto-Native Payments
Lightspark offers a global payments infrastructure, the “Money Grid,” built on Bitcoin and the Lightning Network. It provides two primary access points: Lightspark Connect, for native Bitcoin integration, and Grid Switch, which bridges domestic real-time payment systems. Together, they enable instant, low-cost cross-border payments by using Bitcoin as a universal settlement asset. This model bypasses the delays and high fees of traditional correspondent banking, directly addressing the operational friction common in corridors like Panama-India.
To help businesses navigate complex regulatory landscapes, Lightspark provides tools that facilitate compliance. For regulated institutions, Grid Switch offers access via existing fiat rails and includes features like OFAC screening. The platform also provides audit-ready reporting, flexible custody options, and granular permissions. These features are not a substitute for a company's own compliance program but are designed to help them meet their stringent AML/KYC obligations, such as those mandated by Panama's Financial Analysis Unit.
To learn more about how Lightspark is building the future of open, instant financial infrastructure, visit their website.
Notice: This article is provided for informational purposes only and does not constitute legal advice.
Sources
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- "Panama & Cryptocurrency | Blockchain & Cryptocurrency Laws & Regulations." Freeman Law, 2022, freemanlaw.com/cryptocurrency/panama/.
- "Panama City Introduces Cryptocurrency Payments for Public Services." Digital Watch Observatory, 17 Apr. 2025, dig.watch/updates/panama-city-introduces-cryptocurrency-payments-for-public-services.
- "Panama’s Draft Bill Sets the Stage for Crypto Payments." Digital Watch Observatory, 30 Mar. 2025, dig.watch/updates/panamas-draft-bill-sets-the-stage-for-crypto-payments.
- Preciado, José Agustin. "Blockchain and Cryptocurrency Regulation." FABREGA MOLINO, 2025, fmm.com.pa/blockchain-and-cryptocurrency-regulation/.
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