PANAMA Law and Practice Contributed by: Teresa Carballo and Edgar Young, Pacifica Legal
3. Licensing and Set-Up Requirements 3.1 Licensing Requirements Panama does not currently require a licence simply because a business uses blockchain or crypto-assets. There is no dedicated Virtual Asset Service Provider, or VASP, licence in force. Regulation may apply if the business accepts depos- its or captures public funds. Remittance rules may apply if the business receives funds to transmit them to third parties. Fiduciary rules may apply if the busi- ness holds or administers assets as trustee or fidu- ciary. Gambling regulation may apply if the product involves games of chance or activities that originate bets, including online betting. Panama makes an important distinction between offering and operating regulated activity from Panama. For securities offerings, Article 128 of the Securi- ties Market Law is central: an offer made to persons domiciled outside Panama is not considered made in Panama, even if made from Panama; an offer made to persons domiciled in Panama is considered made in Panama, even if made from abroad. Licensing is different. If regulated securities activity is carried out “in or from Panama”, an SMV licence may be required even if all clients are offshore. The risk increases where core functions are performed from Panama, such as onboarding, pricing, order accept- ance, execution, advice, custody, margining, liquida- tion, settlement or market operation. An offshore entity may also create a Panama nexus if it is effectively managed or controlled from Panama. Relevant factors include Panama-based directors, Panama-based decision-making, a Panama office or address, local staff performing regulated functions, Panama bank or payment rails, Panama-directed mar- keting, or board control exercised from Panama. Because Panama does not yet have an enacted VASP licensing regime, there are currently no VASP grandfa- thering rules. Existing crypto businesses are not rely- ing on a statutory transitional safe harbour; they are operating because their activities are either outside
securities or financial-instrument intermediation, Arti- cle 272 allows sanctions including fines of up to the greater of 5% of the offender’s own resources, 5% of the funds used in the infringement, or PAB1,000,000, plus suspension or limitation of activities, cancella- tion of licences or registrations, public reprimand, and removal or disqualification of management. For online gambling, the Junta de Control de Juegos, Panama’s gambling regulator, has a clearer enforce- ment framework. Online gambling systems must be registered before implementation by an authorised operator, and no person may advertise or operate online games of chance or betting activities in Panama without a contract or authorisation from the Junta. A foreign gaming licence does not by itself authorise operation or advertising in Panama. The Junta may impose fines of up to PAB100,000 for breaches of the online gambling regulation, doubled in case of repeat offences, and may also request the blocking or can- cellation of websites, domain names or IP addresses used to operate or advertise unauthorised online gam- bling. Panamanian regulators tend to focus on local touch- points: use of a Panamanian company, a Panama address, Panama-directed advertising, Panama- domiciled users, local bank or payment rails, local management, or activities carried out “in or from Pan- ama”. The SMV can investigate persons suspected of conducting intermediation or fundraising through securities or financial instruments without authorisa- tion, examine books and systems, order suspension of acts or transactions, and, where appropriate, inter- vene or close establishments with assistance from public authorities. For online gambling, the cross-border position is stricter: Panama does not accept that an offshore licence is enough. If the activity is advertised or oper- ated in Panama without Panamanian authorisation, the local gambling regulator may pursue blocking and administrative sanctions.
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