On April 15, 2025, Panama City made history as its city council voted to become the first government institution in the country to accept payments in Bitcoin (BTC) and other cryptocurrencies for public services. The decision, announced by Mayor Mayer Mizrachi, allows residents to pay taxes, fees, permits, and fines using Bitcoin, Ethereum (ETH), USD Coin (USDC), and Tether (USDT), marking a significant step toward integrating digital currencies into municipal governance. This move positions Panama City as a regional leader in crypto adoption, reflecting a growing global trend of municipalities embracing blockchain technology.

The initiative bypasses previous legislative hurdles by partnering with a local bank to convert cryptocurrency payments into U.S. dollars on the spot, ensuring compliance with Panama’s legal requirement for public institutions to receive funds in USD. “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 stated on X. He added that this model “allows for the free flow of crypto in the entire economy and entire government,” offering a practical solution without the need for new legislation—a challenge that had stalled prior efforts under previous administrations.

Panama City’s approach contrasts with El Salvador’s 2021 decision to make Bitcoin legal tender, which mandated its use and faced challenges due to price volatility. Instead, Panama’s model is optional, focusing on compatibility with existing financial systems while encouraging crypto adoption. The city joins a growing list of jurisdictions exploring crypto payments, such as Colorado in the U.S., which began accepting crypto for taxes in 2022, and Lugano, Switzerland, where Bitcoin payments for public services were approved in 2023. However, Panama’s national stance on crypto remains cautious—President Laurentino Cortizo vetoed a 2022 bill to regulate Bitcoin, citing financial regulation concerns, indicating that broader adoption may face challenges.

The decision comes amid a global surge in corporate and institutional interest in Bitcoin, with companies purchasing a record 95,431 BTC in Q1 2025, as reported by Bitwise. Panama’s move could further stimulate its local crypto economy, allowing residents to use digital assets for everyday transactions with the government without requiring institutions to directly manage them. The city has not yet disclosed which payment providers or wallets will be supported, but local authorities promised further guidance before the program’s full rollout later this year.

While this step is a milestone for crypto adoption in Latin America, its impact may be limited by the immediate conversion to USD, which some argue restricts true integration of digital currencies into the economy. For Panama to fully embrace crypto, structural changes might be needed to allow digital assets to circulate more freely without constant liquidation. Nonetheless, Panama City’s initiative could serve as a model for other municipalities, potentially pressuring national policymakers to revisit crypto legislation. As the world watches, this pioneering vote may inspire a broader shift in how governments interact with digital finance.