As global interest in digital assets continues to surge, jurisdictions around the world are racing to establish favorable legal frameworks for Virtual Asset Service Providers (VASPs). Among the emerging hubs, Panama stands out as an increasingly attractive destination for crypto entrepreneurs seeking regulatory clarity, operational freedom, and global access. In this guide, we’ll explore the essentials of obtaining a VASP license in Panama, the benefits, legal requirements, and why it could be a game-changing move for your crypto venture.

What Is a VASP License?

A Virtual Asset Service Provider license is a legal authorization that allows businesses to offer services related to the exchange, custody, or transfer of virtual assets such as cryptocurrencies, tokens, and other blockchain-based digital instruments. These licenses are designed to ensure regulatory compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) standards, primarily shaped by the Financial Action Task Force (FATF).

Why Choose Panama for Your VASP License?

Panama offers a compelling value proposition for crypto startups and established players alike. Here's why:

1. Crypto-Friendly Regulatory Environment

Panama has taken significant steps to integrate blockchain and digital assets into its legal system. While it doesn’t yet have a comprehensive crypto law, the country allows VASPs to operate legally under existing financial services legislation with the right approvals.

2. No Crypto Taxation

One of the most attractive incentives is the absence of capital gains tax on cryptocurrencies. As of 2025, Panama does not tax digital asset earnings, provided the income is generated outside the country.

3. Strategic Location and Infrastructure

Located at the crossroads of North and South America, Panama is a hub for international business, with robust banking systems, reliable legal structures, and a highly developed logistics sector.

4. Flexible Corporate Structures

Panama allows 100% foreign ownership and offers versatile company types such as IBCs (International Business Companies) and LLCs (Limited Liability Companies), which are ideal for VASP operations.

Legal Basis for VASP Operations in Panama

While Panama does not have a dedicated “crypto law” akin to MiCA in Europe or the BitLicense in New York, VASP activities can be carried out through financial institutions registered and regulated under the Superintendencia del Mercado de Valores (SMV) or the Ministry of Commerce and Industries (MICI).

Businesses involved in exchanging crypto for fiat, wallet custody, or facilitating crypto transactions may be required to:

• Register with the SMV or MICI

• Implement AML/CTF compliance programs

• Maintain KYC procedures for all clients

• Submit regular audits and compliance reports

 

Steps to Obtain a VASP License in Panama

The licensing process may vary depending on your company’s exact operations, but the general roadmap includes:

1. Company Formation

Establish a legal entity in Panama. Most VASPs opt for a Panama Corporation or LLC, both of which offer strong confidentiality and limited liability protections.

2. Business Plan and Internal Policies

Prepare a detailed business plan outlining your services, technology, compliance framework, and risk assessment. Draft AML/CTF policies, KYC procedures, and data protection protocols.

3. Regulatory Application

Submit your application to the relevant authority (e.g., MICI). This typically includes:

• Incorporation documents

• Financial projections

• Director and shareholder information

• AML compliance manual

• Proof of physical presence (if required)

4. Licensing Fee and Due Diligence

Pay the applicable registration fees and undergo a due diligence process. Regulatory bodies may conduct interviews or site inspections as part of the evaluation.

5. Ongoing Compliance

Once licensed, you must stay compliant by:

• Updating AML/KYC protocols

• Filing annual financial statements

• Notifying regulators of any material changes

Cost of Setting Up a VASP in Panama

While costs vary depending on the scope and scale of the operation, an estimated breakdown includes:

• Company formation: $1,500 – $3,000

• Legal consultancy: $5,000 – $10,000

• Regulatory fees: Varies by authority

• Compliance setup: $3,000 – $7,000

• Annual maintenance: $2,000 – $5,000

These figures are approximations and may change depending on legal requirements or regulatory updates.

Key Compliance Considerations

Operating as a licensed VASP in Panama requires adherence to a few critical regulations:

• Implement identification and verification procedures for all users.

• Monitor and report suspicious transactions.

• Maintain transaction and customer records for a minimum of five years.

• Conduct periodic internal audits to ensure ongoing compliance.

Challenges and Risks

While Panama offers many advantages, prospective VASPs should also consider the following challenges:

• Absence of specific crypto legislation may create uncertainty.

• Establishing local bank accounts for crypto-related activities may be difficult.

• Maintaining robust AML frameworks can be resource-intensive.

Working with a local legal and compliance expert is strongly recommended to mitigate these risks.

Final Thoughts: Is a VASP License in Panama Right for You?

Panama represents a promising jurisdiction for crypto businesses looking to operate in a favorable tax and regulatory environment. Whether you’re launching a wallet service, crypto exchange, or DeFi platform, securing a VASP license in Panama could be the strategic step you need to scale globally.

With the right guidance and preparation, Panama can offer not just a license, but a gateway into the evolving global crypto economy.