When Mayer Mizrachi, Mayor of Panama City, stood on stage at the Bitcoin 2025 conferenceLas Vegas, Nevada, he declared, “Bitcoin is not just safe. It’s prosperous.” The comment sparked a flurry of headlines because the mayor wasn’t just talking theory – he’d already rolled out a city‑wide crypto payment system in April and was now eyeing bold ideas like Bitcoin‑paid priority lanes for ships crossing the Panama Canal.
Why Panama City Is Betting on Crypto Now
The shift started quietly. On May 16, 2025, Mayor Mizrachi posted “Bitcoin Reserve” on X (the platform formerly known as Twitter) shortly after a three‑hour meeting with two of El Salvador’s Bitcoin architects: Max Keiser, Presidential Advisor for Building a Bitcoin Country, and Stacy Herbert, head of the El Salvador Bitcoin Office. Their discussion covered everything from hydroelectric‑powered mining to cross‑border regulatory harmonisation.
Keiser revealed that El Salvador currently holds a national reserve of 6,179 BTC — roughly $640 million at May 2025 prices — and that the country’s strategy hinges on leveraging geothermal energy from volcanoes. Panama, with its extensive hydro‑electric grid, could supply cheap, clean power for the same purpose, creating a regional mining hub.
How the City’s Crypto Payment System Works
In April, the Panama City Council passed Ordinance 12‑2025, allowing residents to settle taxes, utility bills, and parking tickets in BTC, ETH, USDT, or USDC. The twist? Payments are instantly converted to U.S. dollars by a local bank intermediary, meaning the city never holds volatile crypto on its books. Mizrachi explained the flow during the panel: “The city gets paid in Bitcoin, but it receives in dollars through an intermediary processing, payments processor.”
Because the conversion happens at the point of entry, merchants and taxpayers avoid exchange‑rate risk, while the city garners a modest processing fee that funds digital‑infrastructure projects. Early data from Dig.watch shows that, in its first month, the program processed 1,240 Bitcoin transactions worth an estimated $18 million, with a 0.5 % conversion fee.
- April 2025: Ordinance 12‑2025 enacted.
- May 2025: Over $18 million in Bitcoin‑based municipal payments processed.
- Processing fee: 0.5 % per transaction.
- Potential reserve: up to 200 BTC pending Assembly approval.
Regional Actors Weigh In
Mike Peterson, director of the Bitcoin Beach project in El Salvador, painted a geopolitical picture: “Access to Bitcoin in Central America is a way to push back against the globalists that have always eyed our backyard.” He argued that a coordinated crypto bloc could attract foreign tech investment and diversify export revenues.
Stacy Herbert added a softer touch, announcing that Panama City would import El Salvador’s “What is Money?” textbook into its public‑library system. The material, used in Salvadoran schools from age 7, teaches kids about digital assets, fiscal responsibility, and the basics of blockchain.
Keiser’s “U.S. game theory” hypothesis rounds out the debate. He suggested that as the United States seeks to buy more Bitcoin on the open market, Central American nations that hold or procure Bitcoin could indirectly support U.S. price stability, a win‑win in his view.
Can Ships Really Pay Bitcoin to Skip the Canal Queue?
Perhaps the boldest proposal came from Mizrachi himself: ships transiting the Panama Canal could pay a premium in Bitcoin for priority passage. The idea, reported by CryptoRank.io on the day of the conference, hinges on the Canal Authority’s willingness to accept crypto‑converted payments and the existence of a municipal reserve to guarantee liquidity.
Implementation would require three steps:
- Legislative approval from the National Assembly of Panama to create a municipal Bitcoin reserve.
- Technical integration between the Canal’s toll‑collection system and a crypto‑payment gateway.
- Regulatory safeguards to prevent money‑laundering, likely modeled on El Salvador’s “Bitcoin is money, everything else is an unregistered security” law.
Critics point out that the Canal already charges premium rates for faster service, but supporters argue that a Bitcoin payment could be settled instantly, reducing paperwork and offering a novel revenue stream.
What’s Next for Panama City’s Crypto Vision?
The immediate hurdle is the National Assembly, where the proposal sits on the agenda of the Finance Committee. If passed, the city could earmark up to 150 BTC — roughly $15 million — as a reserve fund, enough to cover the processing fees for the first year of canal‑related transactions.
Meanwhile, the mayor’s office is launching a public‑education campaign, leveraging the Salvadoran textbook and a series of webinars aimed at small business owners. The goal: demystify crypto, boost adoption, and generate a groundswell of voter support ahead of the October municipal elections.
Even if the Canal experiment stalls, the broader impact is already visible. Neighboring cities in Costa Rica and Honduras have expressed interest in replicating Panama City’s payment model, and investors from Switzerland’s “Crypto Valley” are scouting the region for joint mining ventures.
Frequently Asked Questions
How will Bitcoin payments affect Panama City taxpayers?
Taxpayers can choose to pay in Bitcoin, Ethereum, USDT, or USDC. The city instantly converts the crypto to U.S. dollars, so residents won’t see any exchange‑rate volatility on their bills. A modest 0.5 % processing fee is added, but the city promises that the fee helps fund digital‑infrastructure projects like free Wi‑Fi and smart‑meter upgrades.
What legal steps are required to create a municipal Bitcoin reserve?
The proposal must clear Panama’s National Assembly. It starts in the Finance Committee, where legislators review the fiscal impact, then moves to the full Assembly for debate, amendment, and a final vote. If approved, the city can allocate up to 150 BTC as a reserve, subject to annual audits.
Why is El Salvador’s experience relevant to Panama City?
El Salvador pioneered a national Bitcoin reserve, built a dedicated Bitcoin Office, and introduced a country‑wide financial‑literacy curriculum. Those frameworks give Panama a template for regulation, education, and reserve management, reducing the learning curve for the city’s own initiative.
Could Bitcoin payments speed up Panama Canal traffic?
In theory, yes. A crypto‑payment gateway could settle fees instantly, allowing ships to bypass paperwork queues. However, the Canal Authority would need to adopt the technology, and the national assembly must approve a municipal reserve to guarantee liquidity for these premium payments.
What are the risks of Panama City’s crypto strategy?
Volatility remains the biggest worry. Although payments are converted instantly, a large reserve could lose value if Bitcoin’s price drops sharply. There are also regulatory concerns about anti‑money‑laundering compliance and the need for robust cybersecurity measures to protect municipal wallets.