TLDR:

Panama City council unanimously approved accepting Bitcoin, Ethereum, and stablecoins for public service payments
Payments will be instantly converted to US dollars through a banking partner to maintain legal compliance
Services covered include taxes, fees, permits, and fines
Mayor Mayer Mizrachi Matalon called it a “historic vote” for modernizing public finance
This move may pressure the national government to pass its long-delayed crypto bill

Panama City has made a groundbreaking decision to accept cryptocurrency payments for municipal services. The unanimous vote by the city council marks a turning point for crypto adoption in the region.

Mayor Mayer Mizrachi Matalon announced on April 15-16 that the city will begin accepting Bitcoin (BTC), Ethereum (ETH), and popular stablecoins like USDC and USDT for public service payments. These services include taxes, municipal fees, permits, fines, and even bus tickets.

The city has developed a clever workaround to navigate legal restrictions. Since Panamanian law requires government agencies to transact exclusively in US dollars, the city will partner with a local bank to instantly convert incoming crypto payments into dollars.

This conversion system allows Panama City to maintain legal compliance while expanding payment options for citizens. Previous administrations had attempted to implement similar initiatives but failed to overcome the legal tender requirements.

Prior administrations tried to push a bill in the senate to make this possible, but we found a simple way to do it without new legistlation. Legally public institutions must receive funds in $, so we partner with a bank who will take care of the transaction receiving in crypto…

— Mayer Mizrachi (@Mayer) April 15, 2025

Innovative Compliance Solution

The workaround demonstrates a practical approach to crypto integration. By partnering with a banking institution that handles the conversion process, the city effectively creates a de facto crypto payment system without requiring changes to national legislation.

“Legally, it’s simple: the Mayor’s Office receives dollars, but there’s an intermediary who receives the crypto, transforms it into dollars, and takes it to the Mayor’s Office,” explained Mayor Mizrachi. This mechanism protects the municipality from volatility risks associated with digital assets.

The city has not yet disclosed which payment providers or wallets will be supported. Local authorities have promised to release further guidance before the program’s full rollout later this year.

Mizrachi emphasized that Panama, despite being Central America’s financial hub, was lagging behind in adopting modern payment methods. The new system “allows for the free movement of cryptocurrencies throughout the economy and throughout government.”

Global Trend in Crypto Adoption

Panama City joins a growing list of jurisdictions worldwide that have embraced cryptocurrency payments for governmental services. This reflects a broader global trend toward digital asset integration in public finance.

The US state of Colorado began accepting crypto payments for taxes in September 2022, using a similar conversion model to what Panama City plans to implement. Lugano, Switzerland announced in December 2023 that taxes and city fees could be paid in Bitcoin.

Vancouver, Canada passed a motion to become a “Bitcoin-friendly city” in December 2024. The city plans to explore integrating BTC into its financial system, including for tax payments.

North Carolina recently introduced legislation titled “The North Carolina Digital Asset Freedom Act” which, if passed, would recognize cryptocurrencies as an official form of payment for taxes.

National Implications

The city’s decision could have broader implications for crypto regulation in Panama. The national government has been debating a comprehensive crypto bill since 2022, but it has faced repeated obstacles in the Senate.

The latest version of the draft bill seeks to regulate Virtual Asset Service Providers (VASPs), including exchanges and digital wallets. It would enforce anti-money laundering (AML) and know-your-customer (KYC) requirements while outlining guidelines for blockchain use in legal and financial services.

Panama City’s move might serve as a catalyst for the national government to advance this legislation. By demonstrating that crypto integration is feasible within the existing legal framework, the city creates a practical example for lawmakers to consider.

The draft bill aims to position Panama as Latin America’s crypto hub by providing greater legal clarity and consumer protection while fostering innovation in the digital economy. If passed, it would establish a comprehensive framework for blockchain-based services throughout the country.

Mayor Mizrachi called the council’s vote “historic” in modernizing public finance and expanding access to decentralized payment options. A formal announcement with further details will be made once the agreement with the partnering bank is finalized.

The post Panama Goes Crypto: Capital City Now Accepts Bitcoin for Taxes and Fees appeared first on CoinCentral.

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Filed under: News - @ April 17, 2025 8:21 am