Crypto Licence in Panama
Therefore, it has indicated that Panama provides favorable conditions for the companies of fintech and Cryptocurrency because of the periodic updates of the financial legislation of the country. This country has a favorable regulatory environment, with low taxes and providing support to blockchain systems, which makes it a preferred location for the establishment of cryptocurrency start-ups. A new bill was introduced to start regulating the legal aspect of crypto, enhancing the sector greatly in 2021. Panama is advantageously located and home to a favorably structured political and economic climate that can prompt international investment and business activity in Latin America. As highlighted in the preceding section, it is possible to attain a Panama crypto license within a short span of time while the-license offers end-to-end solutions to the firms operating in the crypto sector. When applying for a Panama Cryptocurrency exchange license, the persons involved will have to submit the IDs of directors and shareholders, the proof of address, as well as a “due diligence” questionnaire.
Advantages of Having Crypto Licence in Panama
Favorable Tax Environment and Advanced Financial Infrastructure
Tax incentives are other favorable policies available to these enterprises in Panama wherein they can be free from capital gains and foreign income tax hence boost their profitability and foreign investment.
What is more, Panama has a developed banking system and financial services enabling it to support technological initiatives and digital assets so it can be considered as an appropriate location for tech-startups and cryptocurrency.
Strategic Location and Expansion into Global Markets
As a country situated in between both North and South America and the Caribbean, quick access to these jurisdictions as well as the exchange of information and goods is easy.
One of the biggest advantages derived from Panama is the chance to enter different markets, which necessarily brings you more clients; and more importantly, it helps the organization interact with other countries’ financial institutions and payments systems, which is truly essential for business development.
Intellectual Property Protection and Support for Innovation
Panama’s legal system offers reliable protection of intellectual property rights, which a company with new solutions and applications in the fields of technology and software will need to produce and market their products and services safely.
Technological advancements and entrepreneurship are encouraged by the Panamanian government, thereby making the cryptocurrency industry to be vibrant.
Building Trust and Reputation
Holding an official cryptocurrency license in Panama makes companies credible to customers and partners, ensures that they are adopting the best practices in securing their investments and protecting their customers’ rights, it also boosts their internationality.
Regulatory Clarity and Adaptability
Panama is one of the few countries that has developed a coherent policy regarding cryptographic money deals, which could be beneficial for the businesses based on them by stabilizing the market. It will be quite helpful to have elastic rules regarding the presence of digital assets since the market is not very stable, and it can meet global security requirements for such firms.
Types of Crypto Licenses in Panama
Cryptocurrency Exchange License in Panama
A cryptocurrency exchange license is essential for businesses that want to legally facilitate the buying, selling, swapping, and holding of cryptocurrencies. This type of license mandates adherence to strict guidelines, including operational transparency, robust user data protection measures, and compliance with both anti-money laundering (AML) and counter-financing of terrorism (CFT) regulations. Securing this license ensures that an exchange operates within the legal frameworks, providing trust and security to its users.
Cryptocurrency Transaction Service License in Panama
Companies that manage cryptocurrency transactions for clients are required to obtain a specific license. This license confirms that the company has a strong security infrastructure in place to protect both the transaction process and the client’s assets. Furthermore, these companies must comply with stringent anti-money laundering and counter-terrorism financing policies, reinforcing the integrity and safety of their operations.
Cryptocurrency Wallet License in Panama
A cryptocurrency wallet license is tailored for services that offer crypto storage and management. To obtain this license, a company must demonstrate that it has implemented superior security measures for its storage systems, along with reliable procedures for access recovery in case of user data loss or theft. This ensures that the wallets provide a high level of security and resilience, which is critical for maintaining user trust and safeguarding digital assets.
Requirements for a Crypto License in Panama
Businesses aiming to operate a cryptocurrency exchange in Panama must adhere to specific regulatory requirements to secure a license. Here’s a step-by-step guide to navigating the licensing process:
- Establishment of a Legal Entity – Companies must register as a Specialized Financial Institution (SFI) under Panamanian law. This involves creating a legal entity that is recognized and regulated under this category.
- Procurement of Necessary Licenses – Obtain a commercial license and ensure registration in Panama’s public registry. This step is crucial for legal operation within the country.
- Transparency and Disclosure – Publish essential company information on the official website. This includes the commercial name, the physical office address, domain names, contact email addresses, and key policy documents such as terms of use and privacy policies.
- Regulatory Compliance Reporting – Inform the regulatory authority about the specific business objectives and gather all necessary customer information as required by law.
- Submission of Business Documents – Provide a comprehensive business model, including a detailed three-year business plan and a list of services your company plans to offer.
- Background Checks – Submit personal information, resumes (CVs) of the company’s owners and directors, and criminal records of all related persons.
- Infrastructure Reporting – Prepare a detailed report on the technical equipment that will be used in the operation and submit a recent bank statement confirming the financial readiness of the business.
- Customer Due Diligence – Develop and enforce customer due diligence procedures, along with protocols for managing high-risk transactions.
- AML and KYC Compliance – Establish internal policies to comply with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations, including mechanisms to monitor and control transactions.
- Final Documentation Submission – Complete and submit all required documentation for the official registration and licensing process.
Documentation for Cryptocurrency Exchange License Registration
To ensure compliance and successful registration of a cryptocurrency exchange in Panama, prospective companies must provide the following detailed documentation to the regulatory authorities:
• Activity Description: Outline the business activities and the grounds on which the company operates.
• Business Plans: Submit a general business plan along with a detailed plan outlining specific strategies, services to be offered, and expected outcomes during the startup phase.
• Legal Framework Documentation: Draft and submit the social contract for operating as an SFI under Panamanian law.
• Personal and Professional Backgrounds: Include copies of personal data and professional resumes of all key owners, directors, and officers of the business.
• Legal Compliance Certificates: Provide certificates of conviction or declarations of no criminal record for all associated individuals.
• Operational Readiness Reports: Detail the technical infrastructure and customer service capabilities.
• Financial Proofs: Present a bank statement confirming adequate funds for legal operations under the cryptocurrency exchange license.
• AML and KYC Documentation: Describe all internal control procedures aligned with AML and KYC standards, including transaction monitoring policies.
• Government Fee Payment Proof: Confirm payment of all applicable government fees and charges related to the license acquisition.
Following these detailed steps will help ensure that your business meets all requirements for operating a legally compliant cryptocurrency exchange in Panama
Taxation Framework for Cryptocurrencies in Panama
Panama is crafting a tax framework specifically for cryptocurrency enterprises, utilizing a territorial tax system that only taxes locally sourced income. Key aspects of the tax regime for cryptocurrency companies include:
• Corporate Income Tax: A rate of 25%, applied solely to income generated within Panama.
• Value-Added Tax (VAT): Cryptocurrency transactions are presently exempt from VAT, though this policy is subject to future adjustments.
• Dividend Tax: There is no dividend tax imposed on cryptocurrency assets.
• Capital Gains Tax: Cryptocurrency assets are not subject to capital gains tax.
• Annual License Fee: Ranges between $250 and $3000, varying by the type of company.
Companies engaging in cryptocurrency transactions must also adhere to international anti-money laundering protocols, which include mandatory customer identification and reporting of any suspicious transactions. This ensures a transparent and secure framework for financial dealings.
Panama presents a conducive environment for cryptocurrency transactions and investments, although firms must stay vigilant regarding changes in tax policies and maintain compliance with all regulatory obligations.
Overview of Cryptocurrency Legislation in Panama
In Panama, Bill 697 was designed to modernize the nation’s legal framework to accommodate the digital economy, cryptocurrencies, and blockchain technology. Although it was passed by the National Congress, it is currently on hold due to a presidential veto. This legislation is pivotal for fostering innovation and drawing international investment by offering beneficial tax conditions for crypto transactions and establishing explicit criteria for obtaining a crypto license in Panama.
The legislation advocates for the integration of blockchain technology to digitalize the identities of individuals and entities within Panama. It also suggests recognizing crypto-validated assets as legitimate payment options for taxes and other governmental dues. Moreover, the law aims to regulate the issuance of digital values to curb financial crimes like money laundering, aligning with global standards.
Key Goals of the Legislation
- Enhancing the digitalization of government services through distributed ledger and blockchain technology, focusing on secure digital identities.
- Establishing definitive regulations and requirements for crypto licensing to ensure legal and tax clarity for the use, ownership, and trading of cryptocurrencies.
- Introducing a tax regime with reduced rates for cryptocurrency transactions to promote economic activity in this sector.
- Implementing stringent international standards for anti-money laundering to bolster financial security.
- Leveraging blockchain and cryptocurrency technologies to attract foreign investments and boost economic development.
For further details on acquiring a crypto license in Panama or initiating a cryptocurrency business in 2024, please reach out to us.
Our Lawyers will Help You with:
Preliminary analysis of the business model;
Full support in establishing a company and substance;
Assistance in the development of internal policies and procedures;
Full support in obtaining a crypto licence in Panama;
Submission of all documents and applications, interaction with regulators;
Legal address for the company. If necessary, assistance in finding a separate office and hiring qualified personnel;
Payment of all state, notary fees and charges;
Legal and accounting advice.