PANAMA Trends and Developments Contributed by: Teresa Carballo and Edgar Young, Pacifica Legal
entity and the contracting and revenue entity carry distinct liabilities. A front-end operator can be used to: • maintain and operate the website, application, or interface, eg, a DEX or swap interface, a perpetu- als interface, a lending or borrowing app, a vault or staking dashboard, a Telegram MiniApp, and the like; • publish and administer the terms of use and pri- vacy policy; • manage integrations with third-party APIs and service providers; • interact with users and external commercial coun- terparties; and • where the interface is monetised, collect interface, routing, or subscription fees. The token issuance vehicle ( token SPV ) The token SPV is a single-purpose corporation that issues and sells a project’s token. We have seen a decline in token issuance. Keeping issuance in its own entity ring-fences a token generation event’s liabilities from the rest of the group’s operations. It is typically kept separate from the company that develops the code, a distinction that matters for both governance and liability allocation. A token SPV can be used to: • issue the project’s native token; • conduct private or public token sales; • enter into the related investment documents, such as SAFTs and token purchase agreements; • act as the contractual counterparty to private and public-sale participants; • manage token distribution mechanics and token generation event activities; and • receive and hold sale proceeds and handle the related contractual obligations. More often than not, founders locate the token SPV in jurisdictions such as the BVI, but from a legal stand- point, a Panamanian corporation can serve the same function and benefit from the same offshore tax treat- ment when the buyers are not located in Panama.
A trend worth noting here is that the token’s role is shift- ing. Fundraising is becoming more equity-focused, and tokens are increasingly used as a tool for market adoption and user rewards rather than as the primary capital-raising instrument. Token sales have not dis- appeared, and many still raise capital, but a growing share of issuances are designed around distribution, incentives, and community growth. That shift, in turn, affects how the token SPV is documented and how its sale and distribution agreements are structured. The development company The software development company (Dev Co, or Labs Co.) is the entity that writes the code and employs the developers, and is treated differently from the rest of the structure. The development company typically sits entirely outside the offshore group. It provides ser- vices to the offshore group under arm’s-length agree- ments. Critically, there is no equity link between the Dev Co and the offshore group. The Dev Co does not own the Foundation, the Foundation does not own the Dev Co, and neither owns the other through any intermedi- ate vehicle. The relationship is most of the time con- tractual. This separation is the structural feature that keeps the offshore group’s tax and liability posture defensible in the founders’ home jurisdictions. Par- ticular attention needs to be given to the Controlled Foreign Company (CFC) rules, place-of-effective- management, and whether the economic substance rules apply. The Dev Co is most commonly incorpo- rated near the founders’ tax residency or in a tax- neutral jurisdiction. Panamanian counsel typically co- ordinates with foreign legal and tax advisers to ensure compliance with regulatory and tax requirements. Part 2 – what is thriving in Panama, and how regulators see it The starting point for any client evaluating Panama is that crypto-related activity is lawful but not subject to a dedicated regulatory regime. Panama has not enact- ed a Virtual Asset Service Provider (VASP) framework. The legal basis for current crypto activity rests on the constitutional principle of legality set out in Article 18 of the Constitution, which provides that any conduct not expressly prohibited by law is permitted. Because no statute prohibits crypto-related conduct, projects
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