Panama City Approves Cryptocurrency Payments for Municipal Services

Panama City's municipal government has approved the use of cryptocurrency for various government payments. Mayor Mayer Mizrachi Matalon announced on Wednesday that residents can now use digital currencies to pay for taxes, fees, tickets, and permits.

The city will accept four cryptocurrencies: bitcoin, ether, USDC, and USDT. This adds Panama City to a growing list of municipalities worldwide that allow cryptocurrency for government payments.

Mayor Mizrachi explained that the city achieved this without passing new legislation. Instead, they partnered with a bank that converts the cryptocurrencies into U.S. dollars at the time of payment, as U.S. dollars are legal tender in Panama alongside the local currency.

"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 $," Mizrachi wrote on social media. He added that this method "allows for the free flow of crypto in the entire economy and entire government."

El Salvador, which pioneered nationwide Bitcoin adoption in 2021, faces significant regulatory challenges. According to the Central Reserve Bank, only 20 of 181 registered Bitcoin service providers (11%) currently operate legally in the country, with most failing to meet anti-money laundering and cybersecurity requirements.

Other U.S. cities have made similar moves. Detroit began allowing citizens to pay city fees and taxes through PayPal in November 2024. PayPal has integrated cryptocurrency trading infrastructure and launched its own stablecoin called PYUSD.

At the state level, Colorado started accepting cryptocurrency for tax payments in September 2022. North Carolina has also introduced a bill to permit residents to use select cryptocurrencies for taxes and other transactions.

Despite these initiatives, actual usage remains limited. According to Colorado Newsline, Colorado citizens submitted only $57,211 in cryptocurrency tax payments since implementation three years ago, a tiny fraction of the state's annual tax revenue which reaches billions of dollars.