It pained me to say this at the time. After all, I made Panama home almost seven years ago and I would love nothing more than to see it become a crypto haven for innovation and development. But, at least in October of last year, I couldn’t see that happening.
Well, it’s a new year and we have a new administration. Now that Nito Cortizo is the President of Panama, what does this mean for the world of crypto? That’s the question everyone is asking me.
The new President of Panama, Nito Cortizo is unapologetically pro-business. In fact, he was the favored candidate of everyone I know in the Panama business community.
Now, I’m not a political activist, I never have been. That said, when a politician supports business and innovation, good things can happen.
With this in mind, I view the new administration as a definite improvement over the previous one. And I’m generally encouraged by Nito’s proposed policies.
I’ll even go so far as to say that I’m optimistic he will encourage crypto-related businesses to move to Panama. Especially if those projects help move the country forward.
But unfortunately, a change in leadership is just one of the necessary steps needed for Panama to really become a crypto hub. The old president was not the only thing holding Panama back from becoming a crypto-friendly jurisdiction.
Again, let me reiterate: I love this Panama. It’s a great place for a lot of reasons. And I’m not even talking about the beaches or the tropical weather all year round. Panama is a great place to do business and to live.
As I outlined in my last Panama article, it has favorable taxes and is supportive of new businesses. Not to mention being ideally located to operate a global hub.
But like everywhere, it has its challenges. And one of the best ways to illustrate this is to take a look at Panama’s banking industry.
Panama’s banking industry has every natural advantage an industry could ask for. Panama is a tax haven, meaning depositors pay zero taxes on their income. Panama is the hub of Latin America with hundreds of multinational companies headquartered here. It’s a global shipping center and logistical mecca thanks to the canal. It receives military protection from the USA. And its local currency is the US Dollar.
What more does an industry need to succeed?
There is every reason in the world why businesses should want to bank here. But they don’t. Why?
There’s no nice way to say this, so I’ll just say it. Panama’s banking industry is horribly mismanaged.
In my time here, I have experienced a wide range of banking issues. From obnoxious KYC/AML to terrible customer service. I’ve seen it all. Panamanian banks just haven’t caught up to 2019.
To give you a little example, my local banker recently emailed me a document to sign. I quickly uploaded it into DocuSign and returned it. Two days after submitting the document, my banker called me to tell me that the signature was rejected because the bank couldn’t accept an electronic signature.
I know this might not seem like a big deal, but it’s a symptom of a much bigger problem. Panama is slow to adopt new technology, slow to innovate and even slower to realize it’s behind the times.
My banker didn’t apologize for the inconvenience. For her, like most Panamanians, slow, repetitive bureaucracy is the norm. She doesn’t find it inconvenient and she certainly doesn’t see a need to innovate.
To get back to the point of this article…considering the regulation and flexibility needed to make crypto viable in Panama, I don’t see the pieces coming together anytime soon. While the opportunities for improvement are vast, the challenge will be too great for Panama and Panamanians to overcome.
Ultimately, I love living in this country. But I’m not optimistic that Panama is going to be on the cutting-edge of any regulatory break-throughs. The mindset of the people and its leaders is just not there.
Panama is a great place to call home. And that’s why many crypto entrepreneurs and investors, myself included, moved here. But as a jurisdiction to register and operate a crypto project, it has challenges that still need to be addressed.
The election of President Cortizo has injected new hope that all this will change. Let’s hope I’m proven wrong and Panama really does become the next crypto haven. But I’m not holding my breath and Insiders shouldn’t either.
Dean Steinbeck, Managing Director of Crypto Law Insider, is the leading authority on legal issues related to cryptocurrency and blockchain technologies. Learn more