PANAMA Law and Practice Contributed by: Teresa Carballo and Edgar Young, Pacifica Legal
or the rights attached to it, bring it within an existing regulated category. It is important to distinguish issuance from distribu- tion or intermediation. A Panamanian entity may issue tokens, including from Panama, provided no regulat- ed activity is conducted from Panama. Even where a token is a security, Article 128 of the Panamanian Securities Market Law provides that an offer made to persons domiciled outside Panama is not deemed made in Panama, even if made from Panama. By con- trast, an offer made to persons domiciled in Panama is deemed made in Panama, even if made from abroad. Panama does not impose mandatory white paper or disclosure requirements for regular crypto-token issu- ances. However, a well-structured issuer should still have a properly maintained Panamanian entity, board approvals, token terms and conditions, a technical disclosure or white paper, wallet and smart-contract controls, sanctions and anti-money-laundering proce- dures, accounting records and beneficial ownership compliance. If the token represents or references a security, finan- cial instrument or other regulated asset, the analysis becomes more complex and remains a grey area. In that case, the SMV would likely look at the underlying rights and economic substance, not merely at the fact that the asset is tokenised. 2.5 Market Abuse Panama has a market abuse and insider trading framework, but it is designed for the securities mar- ket, not for crypto-assets as a standalone asset class. Under the Panamanian Securities Market Law, pro- hibited conduct includes fraudulent or misleading acts involving registered securities, false statements or omissions, market manipulation, undisclosed paid promotion, falsification of books or records, unli- censed regulated activity, and improper use of privi- leged information. Insider trading rules apply where a person uses material non-public information obtained through a privileged relationship to gain an unfair advantage in the purchase or sale of registered secu- rities, or discloses that information to another person who may trade on it.
These rules are securities-specific. They apply to reg- istered securities and regulated securities-market par- ticipants, including broker-dealers, investment advis- ers and other licensed intermediaries, which are also subject to conduct-of-business rules on conflicts of interest, client information, personal-account dealing and front-running. For crypto-assets, the position is different. Panama does not currently have a crypto-specific market abuse regime. A regular crypto-token that is not a security, financial instrument or tokenised regulated asset is generally outside the statutory securities-mar- ket abuse framework. Therefore, concepts such as insider trading, market manipulation or front-running do not apply to ordinary crypto trading in Panama in the same way they apply to traditional securities. That does not mean abusive conduct is risk-free. Fraud, misrepresentation, breach of contract, con- sumer protection, sanctions, anti-money laundering, cybercrime and criminal-law issues may still arise. If a token represents or references a security or financial instrument, or if the activity involves regulated securi- ties intermediation in or from Panama, the SMV frame- work may become relevant. 2.6 Non-Compliance Panama has not yet had major public enforcement actions specifically against crypto-asset firms. Enforcement is still perimeter-based, regulators would act when the business appears to be carrying out a regulated activity without the required licence, regis- tration or authorisation. Where the SMV becomes aware that a Panamanian company, or a business using a Panama address, may be providing securities-related services without authorisation, it commonly issues a public warning stating that the entity is not licensed. These warn- ings are reputationally significant even before a formal sanction is imposed. The SMV may also open prelimi- nary inquiries or formal investigations for unlicensed activity under Article 255 of the Securities Market Law. For serious securities market breaches, including unregistered public offerings, unauthorised public offerings of financial instruments, or unauthorised
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