PANAMA Law and Practice Contributed by: Teresa Carballo and Edgar Young, Pacifica Legal
2.2 Crypto-Asset Regulatory Frameworks Panama does not currently have a statutory taxonomy for crypto-assets. Regulators have generally treated crypto-assets as unregulated digital assets, not as securities, money, legal tender or electronic currency by default. The SMV has taken the position that cryptocurrencies are not automatically “securities” under the Panama- nian securities framework, but it will look at the sub- stance of the product. If a token, platform or contract has securities-like features, or involves public offer- ings, brokerage, investment advice, custody of securi- ties, derivatives or market infrastructure, the securities regime may apply. The SBP has similarly stated that the exchange, investment, purchase, sale and general commerciali- sation of Bitcoin or similar instruments have no spe- cific regulation in Panama and fall outside the SBP’s direct competence, while banks must still maintain due diligence controls. No dedicated crypto-asset or VASP law is currently in force, and there is no enacted crypto regulation with a fixed commencement date. However, regulation is clearly under discussion. 2.3 Regulated Firms and Legal Wrappers Using a legal wrapper, such as a fund, does not by itself make crypto-assets regulated securities in Pan- ama. The SMV has consistently taken the position that cryptocurrencies are not currently treated as secu- rities, money or electronic currency under Panama- nian law. Therefore, a fund that holds ordinary crypto- assets is not automatically regulated simply because of its crypto exposure. The fund wrapper does, however, add a separate layer of analysis. The key questions become whether the fund interests are being offered to persons domi- ciled in Panama, whether the fund is managed in or from Panama, whether there is a public offering, and whether any person in Panama is acting as investment manager, distributor, broker, custodian or adviser. It is also important to separate issuance from distribu- tion or intermediation. A Panamanian entity may issue
crypto-assets from Panama where the token is not a regulated instrument and is not marketed to Panama- domiciled persons. Under Article 128 of the Securi- ties Market Law, an offer made to persons domiciled outside Panama is not deemed made in Panama merely because it is made from Panama. However, if brokerage, investment advice, custody, order rout- ing, pricing, market-making or other intermediation is conducted in or from Panama, a separate licensing analysis may arise under Article 50. For investment funds, there are relevant carveouts. A fund is not generally considered managed from Pana- ma merely because it is incorporated under Panama- nian law, has a non-main domicile in Panama, receives administrative services in Panama, or has some direc- tors in Panama, provided the decision-making thresh- old is not effectively controlled from Panama. Private fund structures may also be available where offers are made privately, investors are limited, or participation is restricted to qualified investors with the applicable minimum investment. The position is stricter for SMV-regulated firms. A licensed brokerage house or investment adviser can- not simply use its existing licence to manage crypto- assets, execute crypto orders, custody crypto-assets locally or treat crypto-assets as securities-market instruments. This creates a practical asymmetry: cer- tain crypto activities may be carried out by unregulat- ed technology or crypto companies, while SMV-regu- lated entities remain limited to the activities expressly permitted under their existing licences. 2.4 Token Issuance Panamanian entities are widely used for token issu - ances. This is not because Panama has a specific token issuance regime, but because a regular crypto token, with no underlying security, financial instrument or other regulated asset, is currently outside Panama’s securities and financial regulatory perimeter. If the token is simply a crypto-asset and does not rep- resent or reference a security or financial instrument, issuance from a Panamanian entity should generally not require approval, registration or licensing from the SMV. The analysis changes only where the token itself,
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