Panama's President Laurentino Cortizo said Wednesday that he may veto a recently passed law regulating the use of cryptocurrencies in the Central American country.
Although he called the law a "good law," Cortizo said at a Bloomberg event that he was leaning toward not signing it given the information he has.
"I have to be very careful if the law has clauses that refer to money laundering activities or anti-money laundering activities," Cortizo said. "This is very important for us." He pointed out that his country has been working diligently to be removed from the U.S. Financial Action Task Force (FATF) list, also known as the Gray List.
In March, the FATF asked Panama to submit an "action plan" by June 2022, failing which the agency could "require all jurisdictions to apply enhanced due diligence to business relationships and transactions" with the country.
The crypto bill, introduced by Panamanian Congressman Gabriel Silva and approved by a 40-0 vote in a plenary session of the Legislative Assembly on April 28, requires Cortizo's signature to become law. His decision is due no later than 30 days after passage.
Although the law does not stipulate that cryptocurrencies become legal tender, it allows cryptocurrencies to be freely used as payment for all transactions. It also allows companies with digital assets to establish operations in the country and treats crypto-assets as foreign-source income, which - in line with Panama's territorial tax system - means no taxes on capital gains.