PANAMA Law and Practice Contributed by: Teresa Carballo and Edgar Young, Pacifica Legal
concluded, on the facts presented, that platforms allowing the negotiation of contracts based on future event outcomes did not fall within the Panamanian securities-market regime and did not require licensing, registration, or authorisation before the SMV. Panama’s blockchain market is moving from incorpo- ration-driven structuring to local governance-driven structuring. The strongest projects are combining flex- ible Panamanian entities with real directors, capable service providers, treasury controls, intellectual prop- erty assignments, development agreements, account- ing records, and a clear regulatory analysis. 1.1.2 Regulatory Sandbox There is currently no formal regulatory sandbox in Panama for blockchain-based projects, meaning there is no official test environment where crypto, block- chain, or virtual-asset businesses can operate under regulatory supervision with temporary exemptions from licensing, registration, or compliance require- ments. In its 2018 position on cryptocurrencies, the SMV indicated that virtual assets were not, at that time, treated as securities, money, or electronic currency under Panamanian securities regulation, and that a crypto exchange platform, on the facts presented, did not require notification to or licensing by the SMV. Other regulators have taken a similar perimeter-based position. The Superintendency of Banks of Panama ( Superintendencia de Bancos de Panamá , or SBP), has stated that cryptocurrency exchange, investment, and commercialisation activities are not specifically regulated and do not fall within its regulatory compe- tence, while reminding supervised banks to apply due diligence controls and manage the risks of misuse of their platforms. Likewise, the Superintendency of Non-Financial Subjects (SSNF) does not regulate crypto companies merely because they are crypto-related. Its role is to supervise specific non-financial obligated subjects under Panama’s anti-money laundering framework, such as casinos, real estate businesses, precious metals dealers, certain professional services, and oth- er listed sectors. A blockchain company would there-
fore generally fall outside the SSNF’s scope unless its actual business also fits into one of those supervised categories. 1.1.3 Regulation of Blockchain Technology Panama’s approach to blockchain is open. The gov- ernment has not prohibited blockchain-based busi- nesses, and regulators generally do not treat block- chain as regulated simply because it uses blockchain. This means that non-custodial interfaces, software development, protocol front ends, real-world asset structuring, and intellectual property holding are gen- erally more workable, provided they do not cross into a regulated activity. By contrast, higher-risk use cases include custody, brokerage, investment advice, public offerings to persons domiciled in Panama, banking, remittance, payment services, gambling or betting, and securities or financial instruments activity con- ducted “in or from Panama”. The SMV has taken this functional approach in its opinions on crypto-assets, indicating that cryptocur- rencies are not automatically securities, money, or electronic currency under current Panamanian law. The SBP has similarly stated that cryptocurrency exchange, investment, purchase, sale, and commer- cialisation activities are not specifically regulated and fall outside its direct supervisory scope, while remind- ing banks to manage related risks. The current position is therefore not one of aggres- sive promotion or outright restriction. Panama allows lawful innovation, but projects must remain within the limits of existing banking, securities, anti-money laun- dering, tax, gambling, consumer protection, data pri- vacy, and commercial laws. The recent SMV opinion on prediction markets is a good example: the SMV concluded, on the facts presented, that certain event- contract platforms did not fall within the Panamanian securities-market regime, but that does not amount to clearance from gambling regulators. Panama does not use the term “right to be forgotten” in the same technical sense as the European Gen- eral Data Protection Regulation, or GDPR. However, Panamanian law recognises rights that may produce a similar practical effect, including access, rectification, cancellation, opposition, and portability. The National
458 CHAMBERS.COM
Powered by FlippingBook