- Panama City now accepts crypto payments for taxes using BTC, ETH, USDT, and USDC through a new bank partnership.
- The system converts crypto to US dollars instantly and keeps the existing tax structure unchanged.
- Crypto tax payments are optional and available to residents globally without extra cost to the city.
Panama City Council has approved a new crypto payment system for municipal taxes. The plan allows residents to pay taxes, fees, permits, and fines using four cryptocurrencies: Bitcoin (BTC), Ethereum (ETH), Tether (USDT), and USD Coin (USDC). The new system runs through a partnership with Towertrust Inc. and Towerbank International Inc.
Payments Converted Through Banking Channel
The payment model works through a bank-facilitated conversion system. Cryptocurrencies are accepted via a secure escrow-like platform. The bank instantly converts these crypto payments into U.S. dollars. This structure avoids changes to current tax laws or administrative processes.
Public institutions in Panama already handle payments in U.S. dollars. Therefore, the crypto-to-dollar conversion occurs seamlessly. The city will not incur additional costs for implementing this new option.
Previous Efforts Failed to Pass Senate
The past administration had attempted to legalize crypto payments for taxes through new legislation. However, those efforts did not succeed in the Senate. The current administration bypassed the need for legislation by working directly with a financial institution. This move allowed immediate implementation without waiting for legal reforms.
No Mandate for Crypto Use
The use of cryptocurrency for taxes remains optional. Residents can still pay using traditional methods if they prefer. The new system expands choices without replacing existing options.
With this move, Panama City becomes the first government body in the country to accept crypto for taxes. It positions the city as a digital payments leader in Central America. The initiative aims to support modern financial technology while enhancing public payment systems.
Global Access for Residents
Panama’s new system allows residents to pay taxes from anywhere. This improves access and flexibility, especially for citizens living abroad. The system also aims to boost financial transparency across government departments.
Officials believe the system can attract global interest. It may serve as a model for other cities exploring crypto tax payments. The adoption of digital currencies by a public institution signals rising trust in blockchain-based payment systems.
Other Jurisdictions Already Support Crypto Tax Payments
Panama now joins a growing list of global governments supporting crypto tax payments. Several U.S. states and cities already offer similar services. Colorado began accepting crypto for taxes in 2022. However, adoption was limited during its initial phase. Only six crypto tax transactions were recorded in the first three months.
Despite slow starts elsewhere, Panama hopes for better results. The partnership with a local bank may help build confidence. It also reduces complexity for both users and administrators.
