BVI vs Panama for token issuance: which is better?

The BVI and Panama are the two most commonly chosen jurisdictions for offshore token issuance. The BVI is the better choice when regulatory recognition, specific legislative features, or institutional counterparty credibility matter. Panama is the better choice when speed, cost, privacy, and flexibility are the priorities, and regulatory clarity is less important. Most of the time, the right answer depends on what the token is, who is buying it, and what the project needs the issuing entity to do beyond the initial token sale.

This article compares the two jurisdictions directly across the factors that actually determine the choice.

Why these two jurisdictions dominate

The BVI and Panama together account for the majority of offshore token issuance structures globally. Both are well-established international financial centres with decades of experience hosting international corporate structures. Both offer territorial or zero corporate tax, fast formation timelines, strong privacy protections, and flexible corporate vehicles. 

What separates them is how they regulate - or don't regulate - the specific activity of token issuance, and what the legal framework around that activity looks like.

The BVI: what makes it distinctive

The BVI's position in token issuance is built on three specific legislative features that no other offshore jurisdiction currently replicates in combination.

Token issuance does not require a license. The VASP Act 2022 does not treat token issuance as a regulated activity. A BVI company that issues tokens does not need to register as a VASP on the basis of issuance alone. The VASP Act captures the activities that carry real investor protection risk - custody, exchange, brokerage - without capturing the act of issuance itself. This is a deliberate and commercially useful design choice.

On-chain share registers. Under the BVI Business Companies Act 2004, a company's register of members may be maintained in electronic or digital format. Entry on that register constitutes prima facie evidence of legal title to the underlying shares. A BVI SPV can maintain its share register on a blockchain - meaning token holders entered on the register are the registered legal owners of the shares, not merely holders of a contractual promise. 

The SIBA debenture exclusion. SIBA Schedule 2 excludes from the definition of "investment business" the issuance, redemption, and repurchase by a company of its own debentures. A BVI SPV issuing tokenized debt instruments - with defined income streams and fixed-price redemption - is not conducting regulated investment business for that activity. No investment business licence is required for the issuer. 

The institutional familiarity factor. BlackRock's BUIDL fund - the world's largest tokenized money market fund at over $2.9 billion AUM - is structured through a BVI entity. BVI structures are what the institutional market expects to see. Legal counsel in Singapore, London, New York, and Hong Kong are all familiar with BVI entities. This familiarity reduces transaction friction and due diligence costs.

Panama: What makes it distinctive

Panama's case for token issuance rests on two independent legal positions and a cost/speed advantage that is difficult to match.

The SMV's classification position. Panama's Superintendency of the Securities Market (SMV) has confirmed - most recently in Opinion No. 5-2023 and Opinion No. 4-2025 - that crypto assets as a general class are not securities under Decree Law 1 of 1999, Panama's Securities Law. This is an affirmative regulatory position, not a regulatory gap. The SMV has considered the question and answered it. A Panama entity issuing tokens is not issuing securities as far as Panamanian law is concerned - and therefore does not require SMV registration or an investment business licence in Panama.

Important nuance: this general position does not immunise every possible token structure. A token specifically engineered to replicate a traditional security instrument - a negotiable bond, a transferable equity interest - may still engage the Securities Law's definitions regardless of the SMV's general position on crypto assets. Structure matters.

The SMV's territorial jurisdiction. Even where a token might engage the Securities Law, the SMV's jurisdiction under Decree Law 1 extends only to offerings conducted in Panama or targeted at persons domiciled in Panama. An offering structured exclusively for international investors, not solicited within Panama, falls outside the SMV's reach regardless of token classification. These two positions together - the classification position and the territorial limitation - create a robust basis for international token issuances from Panama-domiciled entities.

Cost and speed. A Panama corporation (SA) under Law 32 of 1927 can be incorporated in one to two weeks at a cost significantly below BVI equivalents. Formation is genuinely inexpensive, ongoing maintenance is low, and Panama's territorial tax system means no Panamanian corporate tax on foreign-sourced income. For early-stage teams operating on constrained budgets, this matters.

The PIF option. The Panama Private Interest Foundation under Law 25 of 1995 provides a non-shareholder vehicle with legal personality - useful for DAO structures, protocol wrappers, and founders who want to hold the token project in a purpose-bound entity rather than a company with shareholders.

Direct Comparison

When BVI wins

When the token is structured as a debenture. The SIBA Schedule 2 exclusion is a specific and significant advantage for debt-style tokens. No other offshore jurisdiction offers an equivalent legislative provision that removes the investment business licensing requirement for the issuer's own debt issuance and redemption. If the token structure involves fixed income and fixed-price redemption - the most investor-friendly token structure for many RWA and private credit projects - BVI is the structurally superior choice.

When institutional counterparty recognition matters. If the project needs to engage institutional investors, or pass due diligence processes in certain markets (most often the EU), BVI is a better domicile. The institutional market knows BVI. Explaining Panama adds friction.

When the on-chain share register is the right bridge. For equity-style token structures where the token should confer genuine legal title to shares - not just a contractual claim - the BVI's statutory on-chain register provision is valuable.

When regulatory recognition within the BVI framework matters. The BVI VASP Act's deliberate non-capture of issuance is a feature of a considered regulatory framework, not an absence of regulation. Some sophisticated counterparties and investors specifically prefer a jurisdiction with a real regulatory framework that has made an informed decision not to license issuance, over a jurisdiction with no regulatory view at all.

When Panama wins

When cost and speed are the primary constraints. For early-stage token projects with limited capital, Panama offers formation at less than the cost of a BVI equivalent and is operational within two weeks. If the project is proving a model before investing in heavier infrastructure, Panama is the proportionate choice.

When a PIF is the right structure. For DAO wrappers, protocol treasuries, and founders who want a non-shareholder holding structure, the Panama PIF and the Cayman Foundation Company are both available options. Panama's PIF is cheaper to establish, and for early-stage projects where Cayman-level institutional credibility is not required, it is often the right starting point. Having a Panama token issuance company and PIF in the same structure can be attractive. 

When the investor base is regional or relationship-driven. If the token is being offered to a small, known group of sophisticated investors - founders, early backers, family office connections - and institutional due diligence scrutiny is not the primary concern, Panama's structural benefits matter more and its lower counterparty recognition matters less.

The option neither one offers

Both BVI and Panama are offshore structures. Neither provides EU passporting, US securities registration, or the positive regulatory authorisation of a VARA-licensed UAE entity. For projects that need any of those things - retail EU distribution, US investor participation under registered offerings, or Gulf institutional access through a licensed ARVA structure - a different or additional jurisdiction is required.

A common structure for projects that need both offshore efficiency and regulated market access is to pair a BVI or Panama issuing entity with a licensed entity in the relevant market. The offshore vehicle handles the primary issuance; the licensed entity handles distribution into regulated markets. Our token issuance use case page explains the full structural options.

FAQ

Is the BVI more expensive than Panama? Yes. BVI formation and annual maintenance costs are higher than Panama equivalents. The gap narrows somewhat as the project grows and requires the same legal and compliance infrastructure regardless of domicile. For very early-stage projects, the cost difference is a real consideration; for well-funded launches, it is less significant relative to total project costs.

Can I move my token issuer from Panama to BVI later? Technically, you can incorporate a new BVI entity and have it take on the token issuing function - but this is not a simple administrative transfer, particularly once token holders exist. Changing the issuing entity effectively means issuing new tokens or creating contractual structures to migrate rights. It is significantly easier to choose the right jurisdiction at the outset than to move later.

Do I need separate legal opinions in both jurisdictions? For a BVI or Panama token issuance, you need a legal opinion on token classification under the laws of the issuing jurisdiction, confirming the regulatory treatment of the token and the basis for the non-licensing position. You may also need opinions on the laws of key investor jurisdictions. The issuing jurisdiction opinion is specific to BVI or Panama law and must be prepared by counsel qualified in the relevant jurisdiction.

Can I use both - a BVI holdco above a Panama issuing entity? Yes, and this structure is used by some projects that want the institutional familiarity of a BVI entity at the top of the stack while keeping the token issuance itself in the cheaper, faster Panama environment. The BVI holdco owns the Panama token issuer, provides the investor-facing anchor entity, and can hold intellectual property and treasury assets. The Panama entity issues the tokens. Whether the additional complexity and cost of a two-entity structure is justified depends on the project's specific needs.