Friday, September 22, 2023

Panama Supreme Court to rule on cryptocurrency legislation

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The cryptocurrency legal saga in Panama has reached a new chapter, as the country’s Supreme Court decides the future of the local crypto industry.

The President of Panama sent Laurentino Cortizo on January 3rd. 26 Bill No. 697, dubbed the “Cryptography Act,” was sent to the Supreme Court for review and approval, after vetoing the legislation, claiming that it violated basic principles of the Constitution and was unenforceable.

The Supreme Court must now decide whether to declare the legislation unenforceable or to approve it with modifications.

According to an official statement, the government considers Articles 34 and 36 of the bill unenforceable, as it violates the separation of powers for the state and establishes administrative structures within the government.

President Cortizo has also argued that the law was approved through an inappropriate procedure, after his partial veto of the legislation in June. At the time, the president considered that the bill needed more work to comply with new regulations recommended by the Financial Action Task Force (FATF) that define “financial transparency and the prevention of money laundering.”

Related: Top 5 Most Important Cryptocurrency Regulatory Developments in 2022

The dispute between Congress and the government in Panama centered on this law. In April 2022, Panamanian lawmakers passed a legislative proposal aimed at regulating cryptocurrencies in the country, including bitcoin. However, President Cortizo warned a few weeks later that he would only sign it if it included additional anti-money laundering rules.

The bill was introduced in September 2021 to the National Assembly in Panama, aiming to make the country “compatible with the digital economy, blockchain, crypto-assets and the Internet.” It was removed from the Economic Affairs Committee on April 21 before it was approved by the local Congress.

Depending on the legislation, Panama may “freely consent to the use of crypto assets, including but not limited to Bitcoin and Ethereum” as an alternative payment “for any civil or commercial transaction.”

Moreover, the bill will regulate the tokenization of precious metals and the issuance of digital value. The digitization of identity using blockchain or distributed ledger technology will also be explored by the government innovation body.