Crypto companies thrive in the business-friendly environment of Panama thanks to the country’s lenient approach to the licensing of such entities. There are many benefits to obtaining a crypto currency license for your crypto project in Panama, including a fast and cheap process, minimal documentation, and painless company formation. If you are considering licensing your crypto company in Panama, here is what you need to know.
Key Takeaways
- Panama offers a business-friendly environment for licensing crypto companies with a fast, cheap process and minimal documentation.
- The two primary crypto licenses available in Panama are Exchange Authorization and Wallet Service Authorization, each covering specific activities.
- Applicants must choose a company structure and prepare documentation, but Panama has no minimum share capital requirement for companies.
- Due diligence requirements include compliance with FATF recommendations and strict KYC/AML procedures for all license applicants.
- Ongoing compliance obligations are light, focusing mainly on AML-CFT and KYC standards, with minimal reporting requirements.
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Crypto Currency Licenses in Panama
The Panamanian regulatory authorities mainly offer two types of licenses for crypto-related activities:
- Exchange Authorization. This type of crypto currency license is suitable for companies that plan to provide crypto exchange services. In order to obtain it, you must first register your entity as a Specialized Financial Institution (SFI) in Panama.
- Wallet Service Authorization: This license in Panama allows registered entities to offer cryptocurrency wallet services to customers.
The company formation process in Panama is the same regardless of which type of license you are planning to apply for. More and more crypto exchanges, decentralized projects, DEXes, NFT, GameFi platforms, and other business entities are applying for the Specialized Financial Institution (SFI) license in Panama.
Panama Crypto Regulations
The Panama crypto license and its issuance process are governed by a number of regulatory bodies. They include the Superintendency of Banks of Panama (SBP), the
Financial Analysis Unit (UAF), the Ministry of Commerce and Industries, and the National Securities Commission (CNV). All of these institutions base their licensing and licensee overseeing processes on Law 129 of 2020, which promotes compliance, transparency, and accountability among finance and crypto-specific businesses in Panama.
Applicant Requirements
If you plan to license your business under the Specialized Financial Institutions (SFI) category, you will be required to form a company in Panama first. The first step is choosing the company form among the two most popular options: a Corporation (Sociedad Anónima) or a Limited Liability Company (Sociedad de Responsabilidad Limitada). Then, you must choose an appropriate name for the company, appoint the directors and all the key personnel, and draft the Articles of Incorporation. Once the company is formed, you might move on to preparing your licensing application.
When it comes to local presence, Panama is one of the most flexible offshore jurisdictions worldwide. Currently, the country does not have any economic substance and residence requirements. Besides, for the Sociedad Anónima, there is no minimum share capital requirement in Panama to date. Despite this, applicants commonly authorize a share capital of around 10,000 USD.
KYC/AML Requirements
The primary thing you need to know about due diligence and AML/KYC compliance in Panama is that the country requires all license applicants to stick to and fulfil the FATF Recommendations. Before you apply for the crypto currency license, you must adopt strict AML-CFT and KYC compliance procedures, including identity verifications for clients, transaction monitoring, and reporting of any suspicious activity. For businesses comparing jurisdictions, it’s worth noting that while Panama offers flexible requirements, the DMCC crypto license cost in Dubai may present a different value proposition with its established regulatory framework. A good lawyer can help you put these processes in place with minimal hassle on your side.
Required Documentation
Like with any crypto licensing process, you will be required to prepare and submit a set of certain documentation before proceeding with the Panama crypto license.
Normally, the basic set includes identity documents of the company’s beneficiaries, directors, and shareholders, proof of address, due diligence forms, a business plan, and a detailed description of planned business activities attached. All this paperwork must be submitted to the regulator along with your application.
Regulatory Bodies’ Role
Different regulatory bodies play key roles in the regulation of crypto businesses in Panama. For example, the Superintendency of Banks of Panama (SBP) plays a key role in overseeing cryptocurrency-related financial activities. The Financial Analysis Unit (UAF) focuses on AML/CFT compliance and ensures that all due diligence procedures are in place for crypto currency licenses.
There is also the Ministry of Commerce and Industries, in which the General Directorate of Electronic Commerce controls the licensing of cryptocurrency exchange platforms. Finally, the National Securities Commission (CNV) in Panama keeps an eye on the crypto-related securities in the country and their compliance with applicable laws.
Licensing Timeline
The procedure of obtaining a crypto license in Panama normally does not take more than 2 months. If all the required documentation is in place and no additional comments from the regulator are received, it is possible to finalize the whole process in under 6-7 weeks. In the most optimistic scenario, and depending on the workload of the regulator, you can register your crypto company in Panama in around 1 business week.
Ongoing Compliance
When it comes to ongoing obligations of crypto currency license entities in Panama, there are not many of them and they are all exceptionally light. First of all, constant compliance with AML-CFT and KYC standards is a mandatory requirement. Even though it is recommended to keep books and financial records, there is no obligation, at the moment, to report them to the authorities or submit annual records. Auditing of a company is not required either. If you hire an experienced lawyer, they can assist your company with keeping its financial profile clear at all times.
Pros And Cons of Panama Crypto Currency License
Panama offers a potentially attractive environment for crypto businesses due to its flexible regulatory approach and favorable tax conditions, which can lead to simplified operations and reduced financial burdens. At the same time, the evolving regulatory landscape for crypto currency licenses creates some uncertainty. For local crypto businesses, it’s crucial to maintain rigorous AML/KYC compliance, as well as stay informed on the potential regulatory changes in Panama.
