Under the terms of the proposal, Panama City’s municipal government would begin to accept payments in cryptocurrency for taxes, permits, fees, and other municipal services. This historic move makes Panama City the very first governmental public institution to adopt cryptocurrencies. Although citizens can pay their taxes with Bitcoin, Ethereum, and stablecoins USDC and USDT, there’s a hurdle.
Mayer Mizrachi, the then-mayor of Panama City, made the call. After all, the city by law can only accept dollars. So practically speaking, all crypto payments will be automatically converted to USD via their partnered bank Silvergate.
Panama City council has just voted in favor of becoming the first public institution of government to accept payments in crypto. Citizens will now be able to pay taxes, fees, tickets and permits entirely in crypto starting with BTC, ETH, USDC, USDT. - Mayer Mizrachi, the mayor of Panama City
Panama does have its own currency, the balboa, which is at parity with the dollar. The U.S. dollar has much more legal authority and is the only legal tender of the United States itself.
Four years ago, one legislative effort sought to allow the use of cryptocurrency as payment throughout Panama. However, the initiative stalled in 2022. Further, in March 2023, the Supreme Court found the bill “unenforceable.”
Panama City’s decision to begin accepting cryptocurrency payments heads off a fraught legislative fight over Panama’s crypto future. This approach allows the city to explore the use of digital currencies without directly challenging existing financial regulations.
The impact of Panama City's decision may be limited because of the city's legal obligation to accept only USD. It allows citizens to use crypto for future tax payments. The city will immediately exchange those euros for U.S. dollars.
