PANAMA Law and Practice Contributed by: Kharla Aizpurua O., Roberto Vidal and Miguel Arias, Morgan & Morgan
1. Fintech Market 1.1 Evolution of the Fintech Market The evolution of the fintech market in Panama has been constant and disruptive of traditional models of financing. The market continues to be interested in the country’s strategic position, sta - bility, and diversity. Regrettably, the natural evo - lution of the local market has not been accompa - nied by the necessary legal framework in many cases. Nonetheless, different business models are pursued through approaches. Regardless of the current grey area regulatory situation, with the local regulatory bodies and compliance with the applicable laws or even compliance with what is understood to be applicable regulation in the near future. In the next year, we hope to see regulatory bod - ies’ interest in regulation and the continued growth of international and local players, espe - cially from the perspective of developing or including artificial intelligence in their business models. In that regard, it is worth mentioning that there have already been attempts to regu - late, develop, and promote the use of artificial intelligence at the Legislative Branch level. 2. Fintech Business Models and Regulation in General 2.1 Predominant Business Models Even though the fintech landscape is constantly evolving, Panama’s new and legacy players have currently concentrated on a few specific busi - ness models, as follows. Payment Service Providers (PSPs) These companies offer digital payment process - ing services, such as peer-to-peer, merchant ser - vices, or cross-border transactions. Generally,
these companies offer technological integrations or standalone platforms that ultimately facilitate payments in a prompt and secure manner. Cryptocurrency Exchanges Legacy players typically do not engage in this business model because there is currently a lack of formal regulation. In contrast, new entrants are entering this space and providing these ser - vices. Some of these new players offer a wide range of services similar to those of established cryptocurrency exchanges (including custody of fiat and/or cryptocurrency, trading, and lever - age), while others focus solely on the exchange of fiat and/or cryptocurrency. Digital Wallets Due to the lack of regulation regarding digital wallets, legacy players have been able to use their banking licences to provide digital wallets within their respective ecosystems. New players have mostly avoided this business model due to the potential liabilities derived from infringing the current deposit-taking regulations. Digital Lending Platforms Several fintech startups are focused on digital lending models, using data to assess credit - worthiness for (mostly) personal loans. These platforms offer digital approval processes, with quick disbursements and smaller loans, filling the gap left by traditional lending institutions, which often have strict requirements. 2.2 Regulatory Regime Panama has a unified regulatory regime, mean - ing there is no distinction between state and federal regulation. Industry participants can be subject to one or more of the following three ver - ticals that compose the regulatory regime.
595 CHAMBERS.COM
Powered by FlippingBook