Panama City’s council approved a measure allowing residents to pay taxes, fines, fees, and permits using cryptocurrencies, specifically Bitcoin (BTC), Ethereum (ETH), USD Coin (USDC), and Tether (USDT). This makes Panama City the first public institution in Panama to accept crypto payments. Mayor Mayer Mizrachi announced the initiative, noting that it bypasses the need for new legislation by partnering with a bank to instantly convert crypto payments into U.S. dollars, ensuring compliance with legal requirements for dollar-based transactions.
The system is expected to be fully implemented later in 2025, with the banking agreement to be finalized soon after the announcement. This move aligns with global trends, as jurisdictions like Colorado, Lugano (Switzerland), and Vancouver have also embraced crypto for public payments, though Panama City’s approach focuses on local governance and optional use without mandating crypto acceptance.
Accepting Bitcoin, Ethereum, USDC, and USDT, Panama City legitimizes cryptocurrencies as a payment method, potentially encouraging broader adoption among residents and businesses. This could normalize crypto use in everyday transactions and inspire other municipalities in Panama or Latin America to follow suit. Crypto payments could provide access to government services for unbanked or underbanked individuals who hold digital assets, fostering inclusivity in a region where traditional banking access can be limited.
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The move signals Panama City’s intent to position itself as a forward-thinking, tech-friendly hub, potentially attracting blockchain businesses, crypto investors, and tourists. This aligns with Panama’s history as a financial and trade center. Partnering with a bank to instantly convert crypto to U.S. dollars minimizes volatility risks and simplifies accounting for the city. This could streamline payment processing and reduce reliance on traditional financial intermediaries, potentially lowering costs.
By bypassing the need for new legislation, Panama City sets a practical model for integrating crypto into public finance within existing legal frameworks. This could influence national policy or encourage other jurisdictions to adopt similar workarounds, though it may also prompt regulatory scrutiny to ensure compliance with anti-money laundering (AML) and know-your-customer (KYC) standards. While the instant conversion to dollars mitigates price volatility, the city must ensure robust cybersecurity and reliable banking partnerships to prevent fraud, hacks, or transaction errors, which could undermine public trust.
As one of the first public institutions in Panama to accept crypto, Panama City joins a growing list of global jurisdictions (e.g., Colorado, Lugano) embracing digital currencies. This could enhance Panama’s reputation in the global crypto community and pressure other governments to innovate. Not all residents may be familiar with or have access to cryptocurrencies, potentially creating a learning curve or exclusion for those reliant on cash or traditional banking. The optional nature of crypto payments mitigates this but highlights the need for education and infrastructure.
As residents use Bitcoin, Ethereum, USDC, and USDT for municipal payments, local businesses may feel incentivized to accept these cryptocurrencies to capture this growing market. This could lead to more point-of-sale crypto integrations, especially in retail, hospitality, and services. Businesses that adopt crypto payments could attract tech-savvy residents, tourists, and investors who prefer using digital currencies. Panama City’s reputation as a crypto-friendly hub may draw more blockchain-related visitors, boosting sectors like tourism and real estate.
Businesses accepting crypto will need to invest in payment infrastructure, such as crypto wallets or third-party processors, and train staff to handle transactions. They may also need to implement accounting systems to manage crypto volatility and comply with tax reporting, potentially increasing initial costs. Early adopters of crypto payments could gain a competitive edge, appealing to a niche but growing demographic. This could be particularly impactful for small businesses or startups looking to differentiate themselves in a crowded market.
If crypto payments streamline municipal transactions, businesses may benefit from faster or cheaper government services (e.g., permits or licenses). Increased economic activity from crypto-friendly policies could also drive demand for local goods and services. Not all businesses, especially small or cash-based ones, may have the resources or expertise to adopt crypto. This could create a divide between crypto-ready businesses and those left behind. Additionally, businesses must navigate cybersecurity risks and ensure compliance with AML/KYC regulations to avoid legal issues.
The city’s banking partnership for instant crypto-to-dollar conversion could inspire similar private-sector collaborations, enabling businesses to accept crypto without holding volatile assets. This could lower barriers to entry for smaller businesses. Overall, local businesses could see opportunities for growth and innovation but will need to weigh the costs of adoption, technological upgrades, and regulatory compliance. Those that adapt effectively could position themselves as leaders in Panama City’s emerging crypto economy.
