PANAMA Law and Practice Contributed by: Teresa Carballo and Edgar Young, Pacifica Legal
custody agreements, exchange statements, transac- tion hashes, treasury reports and accounting records. This is why blockchain businesses using Panamanian entities should maintain clear internal records showing which wallets belong to the company, which wallets hold client or third-party assets, who controls each wallet, what approvals are required to move assets, and whether any assets are pledged, escrowed or oth- erwise encumbered. During a reorganisation, Panama law provides finan- cial protection that generally prevents new executions, enforcement actions, restitution claims or similar proceedings against the debtor while the protection is in force. It also restricts unilateral termination or acceleration of contracts merely because the debtor entered reorganisation, and enforcement of real or fiduciary guarantees may be suspended unless the court authorises continuation. For a blockchain busi- ness, this could affect creditors seeking to enforce against crypto treasury assets, collateral wallets, plat- form receivables or other company assets, although automatic on-chain liquidation mechanics may cre- ate practical issues if not properly suspended or con- trolled. In liquidation, the proceeding may be requested by the debtor, a creditor or a foreign insolvency repre- sentative. Grounds include cessation of payment of an obligation recorded in an enforceable title, multiple executions without sufficient assets, abandonment or closure of the business, or other legal grounds. A debtor requesting liquidation must provide, among other things, a list of assets and their location, encum- brances, pending proceedings, debts, audited finan- cial statements, interim financial statements and accounting records. For a digital-asset company, that filing should include a crypto-specific asset schedule: wallet addresses, custodians, exchanges, token posi- tions, stablecoins, smart-contract rights, locked or vested assets, and any treasury or collateral arrange- ments. There are also governance consequences. Directors, officers, managers and legal representatives gener- ally remain relevant during liquidation, and the Public Registry may restrict resignations or removals until replacements are registered. Law 12 also allows liabil-
ity actions against directors, officers, managers, legal representatives, auditors or liquidators, and the court may order precautionary attachment of their assets where there is a grounded possibility of negligent or fraudulent conduct against creditors. In a blockchain context, this makes proper treasury governance, mul- ti-signature controls, board approvals and transaction records especially important. Cross-border issues are likely to be central because many blockchain businesses have users, founders, servers, service providers, custodians and assets out- side Panama. Law 12 contains cross-border insolven- cy provisions, including access for foreign representa- tives and foreign creditors, co-operation with foreign courts, and co-ordination where foreign and Panama- nian proceedings run in parallel. This can be useful, but crypto assets create added complexity because wallet control, exchange custody and smart-contract permissions may sit outside Panama even when the Panama does not currently have a formal self-regula- tory organisation for the crypto-asset industry in the sense of an official body recognised by law or del- egated by regulators to issue binding rules, supervise conduct, discipline members, or provide regulatory safe harbour. There is the Cámara de Comercio Digital y Blockchain, a non-profit association registered in Panama since 2018, whose purpose is to promote digital innovation and technology ecosystems, including blockchain and cryptocurrencies. Its role is mainly educational and promotional: supporting adoption, discussing regula- tory and technological needs, creating networks, and participating in policy conversations. debtor is a Panamanian entity. 1.2.6 Industry and Trade Bodies 2. Regulation 2.1 Regulators and International Alignment Panama does not have a single crypto regulator or a dedicated Virtual Asset Service Provider, or VASP, regime. The relevant authority depends on what the business is actually doing.
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