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- Panama City now allows tax and fee payments in crypto, but all transactions are instantly converted to U.S. dollars.
- Despite symbolic crypto acceptance, the city holds no digital assets, relying on a bank to handle conversions.
Panama City’s Mayor Mayer Mizrachi declared that residents can now pay their taxes and municipal fees using crypto payments. The payment options include Bitcoin (BTC), Ethereum (ETH), and two stablecoins—USDC and USDT. While this marks a significant headline move, the fine print paints a more cautious picture.
Though the city is allowing crypto payments on the surface, a legal requirement still stands: all public institutions must receive payments in US dollars. To navigate this hurdle, the city has partnered with a local bank to handle the exchange. In simple terms, crypto sent by residents will be immediately converted into USD by the bank before landing in city accounts.
Mizrachi took to social media to clarify:
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.
Crypto’s Entry, But With a Catch
This workaround avoids pushing new legislation through the Panamanian Senate, a path that had previously failed. In fact, the idea of crypto payments in Panama isn’t new. Around four years ago, lawmakers introduced a bill hoping to bring crypto into everyday use. That initiative stalled and was officially shut down by the country’s Supreme Court in 2023, ruling it “unenforceable.”
“Prior administrations tried to push a bill in the senate to make this possible, but we found a simple way to do it without new legislation,” Mizrachi explained.
The strategy allows for crypto to play a more active role in transactions, though indirectly, as no crypto ever officially enters city coffers.
While this may sound like a win for innovation, the city’s crypto adoption is largely symbolic at this stage. The municipal government still doesn’t hold or manage any crypto. Instead, the partnered bank effectively acts as a middleman, taking in the crypto, converting it on the spot, and passing along only dollars to the city treasury.
Legal Tender Realities Cloud Full Crypto Use
The structure of Panama’s economy further complicates things. Although the country technically has its own currency—the balboa—it is pegged to the US dollar, and in practical terms, the greenback is what counts. Public institutions are bound to operate in dollars, and there’s little wiggle room around that.
This approach mirrors elements of El Salvador’s crypto experiment. There, too, Bitcoin was adopted as legal tender, but only alongside the US dollar, which remained the dominant form of payment. In Panama City’s case, the workaround lets crypto enter the system but limits its real influence.
Mizrachi remains optimistic, stating this path allows for “the free flow of crypto in the entire economy and entire government.” However, without stronger legislative backing, the broader vision may struggle to take root. The system could result in the steady selling off of digital assets, essentially dumping them onto international markets instead of integrating them locally.
Other Cities Join the Crypto Payments
Panama’s move falls into a global trend of cities embracing digital currencies. Back in December 2023, Lugano in Switzerland made headlines by letting residents pay taxes and city fees using Bitcoin. That decision helped brand Lugano as a standout in crypto acceptance worldwide.
More recently, in December 2024, Vancouver’s city council approved a motion to explore becoming a “Bitcoin-friendly city.” They plan to explore incorporating BTC into their public financial systems, starting with tax payments.
In the U.S., North Carolina lawmaker Neal Jackson introduced the “North Carolina Digital Asset Freedom Act” on April 10, 2025. If passed, it will allow crypto as an official form of payment for taxes—showing that the wave of crypto regulation isn’t slowing anytime soon.
