Panama

Arizona senator doubles down on crypto amid the winter of discontent: Law Decoded, Jan. 23-30

Even though this winter continues to stress test the case for Bitcoin advocation, some lawmakers strive to put their names on the crypto hot list.

Even though this winter continues to stress test the case for Bitcoin (BTC) advocation, some lawmakers strive to put their names on the crypto hot list among the likes of United States Senators Cynthia Lummis and Pat Toomey. State Senator Wendy Rogers, 68, introduced two bold bills in the Arizona legislature. One focuses on making BTC legal tender in the U.S. state. If passed into law, BTC will have the same status as the U.S. dollar, becoming an accepted medium of exchange for debt payment, public charges, taxes and dues in the state. The bill is not Rogers’ first attempt at making BTC legal tender, with a similar bill defeated in 2022.

Rogers also participated in introducing a bill that seeks to make crypto a tax-exempt property in the state. Alongside Senators Sonny Borrelli and Justine Wadsack, Rogers proposed to let Arizona residents decide on amending the state’s constitution regarding property taxes. Should the measure pass the legislature, voters could choose to make digital currencies — specifically tokens that are not “a representation of the United States dollar or a foreign currency” — tax-exempt.

Though not so bold, another important bill was introduced to the New York State Assembly. The bill would allow state agencies to accept cryptocurrency as a form of payment for fines, civil penalties, taxes, fees and other payments charged by the state. The bill does not obligate state agencies to accept crypto as payment, but it does clarify that state agencies can legally agree to accept such payments and that the courts should enforce these agreements.

The fate of crypto legislation will be decided by Panama’s Supreme Court

Panamanian President Laurentino Cortizo sent the crypto legislation passed last year to the high court for review, claiming the so-called “crypto bill” is unenforceable and violates the constitution’s core principle. President Cortizo also argued that the bill had been approved through an inadequate procedure following his partial veto of the legislation in June 2022. At the time, the president argued that the bill needed more work to comply with new regulations recommended by the Financial Action Task Force to improve fiscal transparency and prevent money laundering.

South Korea to deploy cryptocurrency tracking system in 2023

South Korea’s Ministry of Justice has announced plans to introduce a crypto-tracking system to counter money laundering initiatives and recover funds linked to criminal activities. The “Virtual Currency Tracking System” will be used to monitor transaction history, extract information related to transactions and check the source of funds before and after the remittance. While the system is slated to be deployed in the first half of 2023, the South Korean ministry shared plans to develop an independent tracking and analysis system in the second half of the year.

US securities regulator probes Wall Street over crypto custody

The United States Securities and Exchange Commission (SEC) has been probing traditional Wall Street investment advisers that may offer digital asset custody to its clients without the proper qualifications. Much of the SEC’s efforts in this inquiry examine whether registered investment advisers have met the rules and regulations around the custody of client crypto assets. By law, investment advisory firms must be “qualified” to offer custody services to clients and comply with custodial safeguards set out in the Investment Advisers Act of 1940.

Panama’s Supreme Court to rule on cryptocurrency legislation

The high court will now decide whether to declare the “crypto bill” unenforceable or to approve it with modifications.

Panama’s crypto bill saga has reached a new chapter, with the country’s Supreme Court set to decide the future of the local crypto industry.

Panamanian President Laurentino Cortizo on Jan. 26 sent the crypto legislation passed last year to the high court for review, claiming the so-called “crypto bill” violates the constitution’s core principles and is unenforceable.

The Supreme Court must now decide whether to declare Bill No. 697 unenforceable or to approve it with modifications.

According to an official statement, the president’s office considers articles 34 and 36 of the bill unenforceable because they violate the state’s separation of powers and establish administrative structures within the government.

President Cortizo also argued that the bill had been approved through an inadequate procedure following his partial veto of the legislation in June. At the time, the president argued that the bill needed more work to comply with new regulations recommended by the Financial Action Task Force aimed at improving fiscal transparency and preventing money laundering.

A dispute between Panama’s National Assembly and the government has centered on this bill. In April, Panama lawmakers passed a legislative proposal aiming to regulate cryptocurrencies in the country, including Bitcoin. President Cortizo, however, warned a few weeks later that he wouldn’t sign it unless it included additional Anti-Money Laundering (AML) rules.

The bill was introduced in September 2021, aiming to make the country “compatible with the digital economy, blockchain, crypto assets and the internet.” It was moved out of the Economic Affairs Committee on April 21 and approved a few days later.

Based on the legislation, Panamanians “may freely agree on the use of crypto assets, including without limitation Bitcoin and Ethereum” as an alternative payment for “any civil or commercial operation.”

Furthermore, the bill would regulate the tokenization of precious metals and the issuance of digital value. Digitization of identity using blockchain or distributed ledger technology would also be explored by the government’s innovation authority.

SushiSwap to create three DAOs in Panama and Cayman in business restructuring

The proposal received 100% votes, establishing the DAO Foundation, Panamanian Foundation, and Panamanian Corporation.

The Sushi DAO, the decentralized autonomous organization behind crypto exchange SushiSwap, has approved a legal restructuring on Oct. 26 that creates three new decentralized entities, aiming to provide more flexibility to its operations.

The proposal, which received 100% votes in favor, will create the DAO Foundation, Panamanian Foundation, and Panamanian Corporation, each serving different purposes.

Among other things, the DAO Foundation will be able to administer treasury, grants and on-chain governance processes, and facilitate proposals and voting. The Panamanian Foundation will administer the existing Sushi protocol (including smart contracts related to the automated market maker/orderbook, Kashi and staking). Finally, the Panamanian Corporation will operate the graphical user interface layer (or front end) of the protocol.

As per the discussion regarding the proposal, the process to set up the entity structure is expected to take four weeks. According to Sushi, the “purpose of the entity structure & framework is to provide maximum flexibility for Sushi to proceed in whichever direction the DAO or governance takes it, while also mitigating risk.”

The move came as authorities in the United States and European Union continue to work on frameworks for regulating digital assets. Participants in the discussion forum agreed that a legal structure was necessary, but questioned the countries and the model selected. As stated in a long series of comments by a user named Daimon:

“Don’t pick countries which are constantly at risk of political collapse, financial collapse, military coups or North American bail-outs. Don’t pick countries in which you wake up one day and find presidential or royal decrees being plastered on your front door, forcing you to beat a hasty exit through the departure lounge.”

On Oct. 13, John Hickenlooper, a United States senator representing Colorado, penned a letter to Gary Gensler urging the Securities and Exchange Commission (SEC) chair to establish “clear rules” for the crypto market, including identifying the cryptocurrencies that will be considered securities, establishing registration guidelines for trading platforms, and “determining what disclosures are necessary for investors to be properly informed.”

The SEC boosted its ability to handle specialized issuer filings by adding an Office of Crypto Assets in September dedicated solely to cryptocurrency asset applications and services.