In a landmark decision that positions Panama City at the forefront of cryptocurrency adoption in Latin America, the city council has unanimously voted to accept digital currencies as payment for a range of municipal services. This groundbreaking move, announced on April 15, 2025, by Mayor Mayer Mizrachi, establishes Panama City as the first public institution of government in the country to embrace cryptocurrency transactions.
NEW: 🇵🇦 Panama City council votes in favour of accepting payments in #Bitcoin and crypto. pic.twitter.com/tvU49OljdS
— Bitcoin Magazine (@BitcoinMagazine) April 16, 2025
A Pragmatic Approach to Crypto Integration
Unlike El Salvador’s bold but controversial national-level adoption of Bitcoin as legal tender in 2021, Panama City’s approach is notably more measured and practical. The city will immediately begin accepting payments in Bitcoin (BTC), Ethereum (ETH), and leading stablecoins including USD Coin (USDC) and Tether (USDT) for taxes, municipal fees, permits, and even bus tickets.
“My dear City Council has unanimously approved an initiative initiated by the Mayor’s Office, which will allow all citizens to pay their obligations and taxes in crypto,” Mizrachi stated in his announcement on social media platform X. The mayor emphasized that this development marks a significant milestone for Panama, which despite being Central America’s financial hub, had been lagging in adopting modern payment methods.
Innovative Workaround to Legislative Challenges
What makes Panama City’s implementation particularly notable is how it navigated regulatory hurdles that had stalled previous attempts at the national level. Rather than pushing for new legislation—a path that had proven difficult in Panama’s Senate—the city devised an innovative workaround by partnering with a local bank.
“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,” explained Mayor Mizrachi. “Legally public institutions must receive funds in $, so we partner with a bank who will take care of the transaction receiving in crypto and convert on spot to $.“
This arrangement satisfies the legal requirement that public institutions receive funds in US dollars while still enabling cryptocurrency transactions. The partnering bank will handle the immediate conversion of digital assets to US dollars at the time of transaction, ensuring compliance while fostering crypto adoption.
Potential Economic Impact
The mayor’s vision extends beyond simply adding a new payment option. Mizrachi believes this initiative “allows for the free flow of crypto throughout the economy and throughout government,” potentially catalyzing wider adoption of digital currencies in Panama’s private sector.
For Panama City residents, the new payment option offers greater flexibility and potentially lower transaction costs for certain types of transfers. It also provides an official use case for cryptocurrency holders in the region, who previously had limited options for spending their digital assets on everyday services.
Economic analysts suggest this move could also attract cryptocurrency businesses and investment to the region, positioning Panama City as an emerging hub for blockchain innovation in Latin America.
Part of a Broader Regulatory Framework
Panama City’s cryptocurrency acceptance comes on the heels of broader regulatory developments at the national level. Earlier in 2025, Panama’s government unveiled a proposed framework for regulating digital assets and creating a legal structure for blockchain-based services.
The draft bill aims to position Panama as a fintech leader in Latin America by officially recognizing cryptocurrencies like Bitcoin and Ethereum for transactions while introducing licensing requirements for Virtual Asset Service Providers (VASPs) such as exchanges and wallets. The framework also enforces compliance with anti-money laundering (AML) and Know-Your-Customer (KYC) regulations.
Global Context: A Growing Trend
Panama City joins a growing list of jurisdictions globally that have embraced cryptocurrency for government payments:
- Colorado, USA began accepting crypto payments for taxes in September 2022, with immediate conversion to fiat currency.
- Lugano, Switzerland announced in December 2023 that taxes and city fees could be paid in Bitcoin, cementing its reputation as a globally recognized “Bitcoin city.”
- Vancouver, Canada passed a motion to become a “Bitcoin-friendly city” in December 2024, exploring integration of BTC into its financial system, including tax payments.
- North Carolina, USA introduced legislation titled “The North Carolina Digital Asset Freedom Act” on April 10, 2025, which, if passed, would recognize cryptocurrencies as an official form of payment for taxes.
Addressing Volatility Concerns
One of the primary concerns with government entities accepting cryptocurrency has always been the inherent price volatility of digital assets. Panama City’s model addresses this challenge directly by partnering with a financial institution that handles immediate conversion to US dollars.
This approach mitigates the risk of price fluctuations affecting public finances while still providing the convenience of crypto payments to citizens. The arrangement keeps crypto payments optional rather than mandatory, avoiding some of the criticisms faced by El Salvador’s more sweeping approach.
Implementation Timeline and Next Steps
While the city council has approved the initiative, Mayor Mizrachi indicated that a formal announcement with further details will be made once the agreement with the partnering bank is finalized. The implementation is expected to proceed quickly, with the necessary payment infrastructure being established in the coming weeks.
The mayor emphasized the importance of this step for Panama’s reputation as a financial innovator: “Panama, being Central America’s financial hub, was lagging behind in adopting this modern payment method,” he noted, suggesting that this initiative helps maintain the country’s competitive edge in financial services.
Potential Challenges and Outlook
Despite the optimism surrounding this development, challenges remain. The success of the initiative will depend largely on public adoption rates and the seamlessness of the conversion process handled by the partnering bank. Questions about transaction fees, processing times, and user experience will need to be addressed as the system is implemented.
Nevertheless, Panama City’s approach represents a pragmatic middle ground in cryptocurrency adoption—one that embraces innovation while working within existing legal frameworks. By focusing on practical implementation rather than sweeping legal changes, the city has found a way to incorporate digital currencies into everyday government operations without the controversy that has accompanied some national-level initiatives.
As cryptocurrency adoption continues to grow globally, Panama City’s model could provide a template for other municipalities looking to modernize their payment systems while navigating regulatory constraints. This balanced approach might ultimately prove more sustainable than all-or-nothing strategies, potentially accelerating the integration of digital currencies into mainstream financial systems worldwide.
For the citizens of Panama City, the change represents both a convenience and a symbolic step toward embracing financial innovation—one that positions their city at the cutting edge of digital transformation in public administration.
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