In recent weeks, reports that Mexico has banned bitcoin and cryptocurrencies, in general, have surfaced, leading many investors to worry about the future of the crypto market in the region.
Bitso: Mexico Stunted Bitcoin Industry’s Growth – But Hasn’t Banned Crypto Altogether
According to Bitso, while the Bank of Mexico (Banxico) published new rules to govern cryptocurrencies and it could certainly stagnate the growth of the industry, it does not stop the operations of crypto exchanges.
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Banxico publicó nuevas reglas, representan un estancamiento para el sector pero no detienen nuestra operación. Seguiremos enfocados en nuestros usuarios; defendiendo tu derecho al acceso a la tecnología.
— Bitso (@Bitso) March 13, 2019
“Banxico published new rules, represent a stagnation for the sector but do not stop our operation. We will continue to focus on our users; defending your right to access technology,” a roughly translated statement of the exchange read.
Current State of the Mexican Bitcoin and Crypto Market
In an official statement, the cryptocurrency exchange said that the circular released by Banxico claims the central bank wants cryptocurrencies to be utilized for international operations of financial institutions, not for clients or custody.
The exchange said that the circular is not in line with the existing fintech law of Mexico and will continue to carry out conversations with the financial authorities to grow the local fintech industry.
Bitso said in a roughly translated statement:
“We believe that this circular is not in line with the principles of the Fintech Law, undermining principles of innovation, financial inclusion and competition to provide consumer benefits, which were pillars of this Act.”
“Among other things, we will continue to build a close dialogue with the authorities to promote the healthy development of the Fintech sector, for the benefit of all Mexicans and with the objective of continuing to position Mexico as a leader in innovation and financial inclusion with the use of new technologies.”
But, potential hurdles exist. In a separate circular issued in September 2018, Banxico reportedly said that financial institutions, which may include cryptocurrency exchanges, have to be approved by the central bank.
Still, Bitso remains confident that in cooperation with the authorities, healthy development of the fintech sector is possible.
A local publication reported late last year:
“The Bank of Mexico (Banxico) reported that as of this Tuesday, September 11, financial institutions that are interested in offering ‘financial technology services with virtual currencies and foreign currency operations’ may send their request specifying the commissions that will be charged to the public.”
What Will the Future of the Mexican Crypto Sector Look Like?
Mexico passed its first cryptocurrency regulation bill back in March 2018, and it has been less than a year since the country decided to implement regulations surrounding the cryptocurrency market.
Reuters reported that Mexico’s Chamber of Deputies passed the bill with the primary objective to prevent money laundering.
Leading economies in the likes of the U.S., Japan, and South Korea have adopted strict cryptocurrency policies rather than imposing a blanket ban on cryptocurrencies because it becomes even more challenging to prevent money laundering without the necessary tools in place.
With blockchain analytics tools and sophisticated technologies, it is possible to trace transactions on public blockchain networks like bitcoin and ethereum and crackdown on suspicious financial activities.
If the focus of Mexico is to restrict money laundering, with the advice of the G20, it could gear towards strict regulations over a blanket ban.