BITCOIN FINANCES REAL ESTATE PURCHASES in PANAMA

By: Steven Rich, MBA

Bitcoin finances real estate purchases in Panama has become a reality.

Bitcoin has been getting a lot of publicity over the past week regarding record breaking prices. Such as, “Bitcoin surges above $5,000 to new record high” from CNN last October 12th.

Last September, Bitcoin news items praised, “Strong Panama Real Estate Market Only Getting Stronger”. Source According to the Bitcoin Isle article, Panama’s real estate sector is “booming without breaking a sweat”. More so, real estate growth can be accelerated with Blockchain technologies.

Around the same time, Live Bitcoin News proclaimed “That’s Why the Blockchain Can Revolutionize the Real Estate Market”. Source This news story claimed that Blockchain technology offers real estate transactions four advantages over money: “fraud prevention, disintermediation, smart contracts, and Money 2.0”. This translates into eliminating unnecessary intermediaries (disintermediation), fraud prevention by avoiding forged documents because senders and receivers of funds are logged and digital certificates or property ownerships are infinitely recorded.

In addition, Money 2.0 can replace the current monetary system monopolized by central banks printing money. Money 2.0 will free the real estate markets from government monopolies and reduce real estate taxes. Smart contracts are blockchain based computer contracts which can verify, facilitate, and enforce performance of real estate contracts. Thus, less fees will be paid to attorneys for creating contracts.

PANAMA

Recently, Bitnewsbot revealed that a real estate finance company based in Panama will be introducing a “Blockchain Crowdfund for Real Estate” to finance real estate development and borrowing experiences by replacing interest rate risks with equity participation.

The negative consequences of traditional lending required homebuilders, developers, and home buyers to pay up in order to avoid foreclosures. This outdated process will be replaced by “equity participation” as incentives for home builders and developers to perform with “guaranteed buybacks” to limit a borrower’s maximum exposure as well as knowing what their maximum loss potential is. The reliance on credit scores and proof of income will be eliminated.

Blockchain technology in Panama will raise an initial $25 million through sales of institutionalized tokens (PEX-Token) for $1 which can be purchased using Bitcoin, WAVES cryptocurrency, or Ethereum tokens on the company’s website. Homebuyers will pay for their mortgages at current market rates using the PEX Token system. The main portions of the PEX Token will go towards building additional housing projects and financing. Over time, the PEX Tokens will become profitable assets to buy, sell, and trade.

Blockchain technology creates a perpetual funding system while increasing efficiency and transparency more than traditional banking models provide.

NewsBTC (a Bitcoin News Service) also praised the Panama PEX Token model in a news story it ran last September 7th. Source It claimed that the PEX Token will “disrupt the real estate sector by simplifying the way homebuilding, home buying, and home financing can be executed”. PEX Tokens profits will be 80% distributed to the token holders. Buyers benefit from the PEX Token system by paying their mortgages with it and use their savings to buy more PEX Tokens. That way, buyers can share in the 80% profits distribution to token holders.

PANAMA OFFERS LOW COST OFFSHORE BITCOIN LICENSING

The Panama Financial Services License is considered one of the best offshore Bitcoin licenses available worldwide. Source Panama has a strong banking system which does not regulate Bitcoin companies. Unlike Mexico and the United States which treat Bitcoin as a “currency” requiring full licensing to sell or trade.

Therefore, Panama offers Bitcoin sellers and trading companies a licensed, but unregulated offshore Bitcoin brokerage. Licensed Bitcoin brokerages are not required to provide audited financial statements or records to the government, or deal with complicated compliance regulations, and are free from the typical headaches associated with overly regulated industries.

Bitcoin companies holding a Panama Financial Services License can make the following claims on their websites:

"Bitcoin XXX Company is a financial institution licensed by Ministerio de Comercio y Industrias – Republic of Panamá (MICI) in Panama as a Financial Institution."

It is important to note that the claim must only be that the Bitcoin company is “licensed” by the government and not “regulated”.

Also note that a Panama Financial Services License company does not engage in regulated services like:

• Banking;

• Securities trading;

• Broker-dealer services like managed trading or investment funds;

• Savings & Loan;

• Credit Union (Co-ops);

• Cash transmittal or currency exchange services; and

• Fiduciary services like a trust company









ANTI-MONEY LAUNDERING RULES APPLY

Just because a Panama Bitcoin company is licensed, but not regulated or subject to government oversight, the laws of Panama regarding anti-money laundering apply to all businesses and companies in Panama.

Know Your Client and Suspicious Activities laws also apply in Panama as they do in most countries. This requires obtaining basic information regarding who your clients are along with record keeping proving you made these mandatory inquiries.





LOWER COSTS IN PANAMA

FinTech companies not using correspondent bank accounts will have less compliance requirements than traditional brokers. Bitcoin companies sending transfers across their networks outside of the traditional banking system will pay less compliance costs.

Offshore Licensed Financial Services Companies in Panama have no minimum capital requirements. This means that a licensed Bitcoin company can be formed with whatever low capital it chooses.

Finally, there are no corporate or income taxes on profits Panama companies make offshore (outside of Panama’s borders). This is called a “territorial tax system” where corporate and income taxes are only levied on profits incurred inside Panama.

CONCLUSION

Bitcoin finances real estate purchases in Panama has become a reality.

Many Bitcoin news media predict this may become a global trend. Imagine, real estate developments, sales and purchases eliminating most of the intermediaries and reducing he risks of buyer defaults and foreclosures. In the meantime, the purchasers of the cryptocurrency tokens financing these real estate deals may receive future profits beyond their wildest dreams.

Besides revolutionizing global real estate financing, Panama provides low cost government licensing for Bitcoin companies who may operate locally and offshore (globally) with little government oversight and no regulations.

An extra bonus is all income earned outside of Panama by Panama companies are not subject to corporate or income taxes. However, the U.S. and some other countries tax worldwide income which require their taxpayers to declare all global income to their tax authorities.

COPYRIGHT © 2017 – Steven Rich, MBA