Panama is an emerging player on the blockchain scene, attracting a growing number of entrepreneurs, teams and startups looking to conduct initial coin offerings (ICOs) in the tax haven.

Panama is one of the oldest and best-known tax havens in the Caribbean, as well as one of the most established in the region. It has had a reputation for tax avoidance, and has been cited repeatedly in recent years as a jurisdiction which does not cooperate with international tax transparency initiatives.

In recent years, Panama’s economy has experienced a boom and has been among the faster growing and best managed in Latin American. Unsurprisingly, the banking sector is playing a fundamental role in the economy, representing 9.5% of the GDP and employing more than 24,000 people directly.

In particular, one industry that’s witnessed significant traction is the blockchain and cryptocurrency space, with more and more entrepreneurs and startups opting to establish base in the country to take advantage of the jurisdiction’s unique features.

Cryptocurrencies and ICOs in Panama

In 2017, the country welcomed the Blockchain Embassy Panama, which intends to serve enthusiasts, entrepreneurs and developers in the blockchain ecosystem. With everything “crypto” and “blockchain” from clothing, to craft beers, this is the first place of its kind in the country.

Another notable initiative was led by Venezuelan company Cryptobuyer which set up two Bitcoin ATMs last year at two commercial banks in Panama City to enable people to buy and sell the cryptocurrency easily.

In 2016, UK-based startup Caricoin launched a Bitcoin wallet in the Caribbean targeting the unbanked populations. The wallet allows users to send and receive Bitcoin without fees and even top-up their mobile phones.

Panama has also seen an increasing number of foreign blockchain entrepreneurs and startups launching initial coin offerings (ICOs) in the country. Many token issuers and startups use a two company structure with one company in a low tax, low-cost country of operations such as Panama, and one in their country of issuance.

An example is SpringRole, a blockchain-based networking site similar to LinkedIn, that is located in Bengaluru, India, but which is preparing for a US$10-12 million ICO incorporated in Panama.

Other notable ICOs in Panama include Decent.bet, a blockchain-based online sports betting and casino platform, which raised more than US$14 million in its ICO in September 2017, Monster Byte, a cryptocurrency gaming platform, which raised more than US$1 million through in ICO in 2017, and Orocrypt, a blockchain company that aims to issue tokenized precious metals vault receipts, that is currently conducting its token sale.

Blockchain coming to the Caribbean

Panama’s relatively small yet rapidly growing cryptocurrency and blockchain industry, illustrates a broader trend of entrepreneurs and startups choosing tax friendly jurisdictions to establish their businesses and conduct token sales as regulators around the world are increasingly cracking down on cryptocurrencies.

Close to Panama, countries in the Caribbean have also seen an increasing number of blockchain companies being incorporated within their borders.

Governments of Caribbean nations like Puerto Rico and members of the Eastern Caribbean Currency Union (ECCU) have shown their eagerness to embrace and learn about cryptocurrency and blockchain technology.

Earlier this year, eight Caribbean islands unveiled plans to issue their own cryptocurrency called the Digital Eastern Caribbean dollar (DXCD). The DXCD would be a blockchain-based analog of the Eastern Caribbean dollar, a currency issued by the Eastern Caribbean Central Bank (ECCB) on behalf of the eight island economies, namely Anguilla, Antigua and Barbuda, Commonwealth of Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines.

A memorandum of understanding was signed with Barbados-based fintech company Bitt to develop a pilot program, including a feasibility study designed to test the viability and functionality of the DXDC in the financial ecosystem.

In April 2018, the Caribbean Tourism Organization announced plans to introduce cryptocurrency payments for touristic services and products offered across the region. In partnership with Bitt, the organization is looking to implement cryptocurrency-based merchant applications in a bid to “foster broader economic participation in community-based tourism and related sectors” through the use of cryptocurrencies.

Featured image: Panama City financial district, Wikipedia