During the last few years, in the Republic of Panama, there have been attempts at creating legislation that regulate and formalize cryptocurrency policies and all it encompasses. As with all new social concepts that exerts influence over such a wide range of topics such as economies, social structures, and global politics; creating laws that touch on these matters, more often than not, proves to be a very complex endeavor.
In an attempt to ease this process, the Commission for Commerce and Economic Affairs of the National Assembly of the Republic of Panama has created a draft law No.058 which seeks to define concepts and matters that deal with cryptocurrencies and their legislative usage, in what was called: The Establishment of the Terms and Concepts of Cryptocurrency Law in Panama.
This draft defines Cryptocurrency Law as a set of principles, norms and legal rules applicable to cryptocurrencies and their related activities, including their emission, circulation, exchange, investment and custody. To that effect, cryptocurrency is defined as the digital representation of value used by cryptography to ensure the transactions and the control of the creation of new units that can function by means of exchange, units of accounts and reserve of value, without depending on one centralized authority.
The document defines concepts such as tokens, blockchain, intelligent contracts, digital wallets, exchanges, Initial Coin Offering (ICO), Anti-Money Laundering (AML), hard and soft fork, and Know Your Client (KYC) procedures. This last one being an essential part of how cryptocurrencies and exchanges are dealt with by interested parties that seek to offer and promote these services.
One of the main objectives of this draft is to go into a clear description of the legal principles that are oriented towards regulating what is a fairly new study in this country: Cryptocurrency Law.
The motivations that drive this effort are to guarantee judicial safety, transparency, consumer protection, innovation and technology development, international cooperation, as well as the prevention of money laundering and financial terrorism. This endeavor also seeks to incentivize legal investigation and promote research into cryptocurrency ecosystems for a better harmonization of regulatory policies and the responsible investment and usage of cryptocurrencies in this country. At the same time, this could make it more appealing to professionals that want to develop a better understanding of the mechanisms and inner workings of cryptocurrencies, the usage of which is becoming more and more common worldwide.
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by Ricardo Batres - Attorney Think Law