Panama City council greenlights crypto payments for tax, public services

Panama City will begin accepting Bitcoin (BTC), Ethereum (ETH), and popular stablecoins such as USDC and USDT for public service payments, including taxes, fees, permits, and fines, in a move that positions the capital as a regional pioneer in crypto adoption.

Mayor Mayer Mizrachi Matalon announced the initiative on April 16 and called it a “historic vote” by the city council to modernize public finance and expand access to decentralized payment options.

The change is set to take effect through a partnership with a local banking institution that will instantly convert incoming crypto payments into US dollars, which remains the only legal tender authorized for government transactions in Panama.

The mechanism allows Panama City to sidestep a national legal hurdle: under Panamanian law, government agencies must transact exclusively in US dollars.

By integrating a real-time conversion system through the bank, the city maintains legal compliance while allowing crypto usage at the front end. This workaround enables a de facto crypto payment system without requiring approval from the national legislature.

Crypto legislation

The announcement comes as the Panamanian government continues to debate a long-delayed national crypto bill

First introduced in 2022, the bill has been revised multiple times over the years. The proposed legislation would establish a legal framework for blockchain innovation and digital asset use across the country.

However, it has faced repeated obstacles in the Senate, particularly concerning constitutional concerns and the role of the central bank.

The latest version of the draft bill, unveiled earlier this year, seeks to regulate Virtual Asset Service Providers (VASPs), including exchanges and digital wallets while enforcing stringent anti-money laundering (AML) and know-your-customer (KYC) rules.

The framework also outlines guidelines for using blockchain in legal and financial services, including tokenized securities, smart contracts, and decentralized platforms.

Panama City’s move could act as a pressure point for broader adoption of the crypto bill, demonstrating the feasibility of integrating digital assets into existing financial systems without risking legal non-compliance..

The city has not disclosed which payment providers or wallets will be supported, but local authorities said further guidance would be released before the program’s full rollout later this year.