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On Thursday, the Central American country of Panama passed a far-reaching bill in the National Assembly to regulate crypto assets. The bill will promote the use of cryptocurrency for both public and private use.

The bill was approved with 38 supporting votes and two abstentions. There were no votes against the bill, which now needs to be signed by President Laurentino Cortizo to come into effect.

According to text of the bill, “the law regulates the trading and use of crypto-assets, the issuance of digital value, tokenization of precious metals and other assets, payment systems and other provisions.”

The bill also legally recognizes DAOs, or decentralized autonomous organizations.

Panama currently relies on the U.S. dollar as its main currency.

“This bill seeks for Panama to become a hub of technology innovation in Latin America,” Gabriel Silva, a National Assembly member who promoted the bill, told local media. "This will help create jobs and financial inclusion."

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If passed, Panamanians will be able to use crypto to pay their taxes, among other benefits. 

Given Panama's reputation as an epicenter for tax evasion and offshore capital flight — the country gave its name to the Panama papers — experts say the crypto regulation bill might worsen the lack of financial transparency in the country.

"Panama was already in a bad position and these payment methods skip the due diligence processes that international organizations are asking Panama to embrace," Romain Dromard, CEO at financial investment advisory firm K&B Family Office, told Reuters.

Despite not making Bitcoin legal tender like El Salvador's law last year, the regulation is considered more "robust" by some Panamanian politicians. "We can't just establish Bitcoin because that will be unconstitutional and if it's unconstitutional, then the project won't happen," Silva told audiences on Twitter spaces. 

The law would also ensure there are no capital gains taxes on crypto assets, which will be treated as foreign-source income.

The bill is also noteworthy for attempting to improve the transparency of the state by using blockchain tech to make the state functions more public and easier to publicly track. It remains to be seen how this will be implemented.