PANAMA Law and Practice Contributed by: Kharla Aizpurua O., Roberto Vidal and Miguel Arias, Morgan & Morgan
guarantees or bonds related to the construc - tion of works or for the supply of materials or equipment or any other bonds/guarantees. Each of these lines of business has differ - ent applicable regulations (eg, for purposes of reserves or obligations of the parties). 9. Regtech 9.1 Regulation of Regtech Providers Regtech providers are not regulated in Panama. However, financial companies generally use their services in order to comply with AML laws, such as Law 23. 9.2 Contractual Terms to Assure Performance and Accuracy In Panama, there are no regulations govern - ing the terms and conditions of contracts with regtech providers, allowing financial services companies the flexibility to negotiate their con - tractual obligations with these providers. 10. Blockchain 10.1 Use of Blockchain in the Financial Services Industry Due to a lack of regulation, traditional players have been reluctant to implement blockchain technology in the provision of their financial ser - vices. 10.2 Local Regulators’ Approach to Blockchain In recent years, there have been several legisla - tive initiatives, but none have been enacted into law.
The most recent initiative was Bill 697 of 2022, titled “Regulating the Marketing and Use of Vir- tual Assets, Providers of Virtual Asset Services, and Other Provisions” ( “Bill 697-2022” ). This bill aimed to: • provide legal, regulatory, and fiscal certainty for using and holding crypto-assets, virtual asset service providers, commercial actors of virtual assets, and issuers of virtual assets and electronic money in the Republic of Panama, including mitigating the risks of illicit use of such technologies; • promote financial inclusion, foster a robust ecosystem of innovation in financial services, enhance competition among financial service providers, and ensure financial consumer freedom of choice; and • facilitate Panama’s involvement in provid - ing state-of-the-art technology services that promote financial inclusion through a virtual assets exchange platform and an official digital wallet, enabling secure transactions for both individuals and legal entities. The National Assembly approved the original bill, but it was partially vetoed by the President and returned for further debate and adjustment. On 28 October 2022, the National Assembly approved an updated version of Bill 697-2022, incorporating the President’s vetoed articles. However, on 26 January 2023, the President presented an objection of unconstitutionality to the Supreme Court of Justice. On 14 July 2023, the Supreme Court ruled that Bill 697-2022 was unconstitutional, effectively ending the bill. 10.3 Classification of Blockchain Assets Blockchain assets are not regulated in Panama. Under Opinion 2-2015 and Opinion 1-2018, the SMV has established that tokens registered in a
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