Panama City, Allowing tax payment with cryptocurrencies…Expansion of practical use of digital assets

The capital of Panama, Panama City, has decided to introduce cryptocurrency as a means of paying public utility charges. The city council recently passed a proposal allowing taxes, fees, fines, and permit issuance costs to be paid with Bitcoin (BTC), Ethereum (ETH), USD Coin (USDC), and Tether (USDT).

This measure is designed to allow cryptocurrency payments while maintaining the legal tender system of the dollar. When a citizen pays with cryptocurrency, the asset is instantly converted to US dollars through the city's cooperating bank, satisfying legal requirements without separate legislation.

Matalon, the mayor of Panama City, explained, "The previous administration attempted to introduce a bill in the Senate to pursue this, but we found a simple way to implement it without new laws." He added, "Public agencies must necessarily receive funds in dollars, so we worked with banks to convert digital assets to dollars in real-time. This enables cryptocurrency to be smoothly utilized in government systems and the broader economy."

This system is designed to reduce administrative burden by preventing public agencies from directly holding or managing cryptocurrency, while also laying the foundation for the growth of Panama's digital asset ecosystem.

This measure is different from El Salvador's 2021 approach of designating Bitcoin as legal tender. Panama's method does not recognize cryptocurrency as legal currency, but selectively allows payments while maintaining compatibility with the existing financial system.

A similar trend is being observed in the US as well. The state of Colorado has allowed the use of cryptocurrency for tax payments since September 2022, and North Carolina has introduced a bill permitting public transactions using digital assets.