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Mexico may become the next major frontier for cryptocurrency. Like most other countries around the world, the Mexican government is looking to regulate Bitcoin. So far, that process has proven to be far more complicated than assumed. However, a new framework will need to be put in place, especially for companies storing and transmitting cryptocurrencies on behalf of their clients.
MEXICO PONDERS THE FINTECH LAW
In a way, it is anything but surprising to learn the Mexican government wants to regulate Bitcoin companies. More specifically, anyone who stores or transmits cryptocurrencies on behalf of their clients will be scrutinized by the country’s central bank. The FinTech Law, as this bill is known, is currently awaiting government approval. The law would create a regulated framework in which banks could store cryptocurrencies and electronic payment processing firms could transfer them. This is a rather surprising development, as most people expected more opposition from financial institutions in this regard.
After all, banks and other financial service providers have opposed Bitcoin and altcoins for many years now. Slowly but surely, the tide is turning in favor of cryptocurrencies, by the look of things. If Mexican banks are willing to embrace Bitcoin in some official capacity, things will get very interesting moving forward. All of this hinges on whether or not the bill will get approved or not, though. It is now up to the Senate to vote on this legislation, and it is unclear when that will happen exactly.
Bank of Mexico’s Alan Elizondo claims the companies falling under the purview of this bill would be monitored more closely than non-banking financial companies. This is both a blessing and a curse at the same time. On the positive side, it would bring more legitimacy to Bitcoin in Mexico, as the effort would have support from both the government and central bank. However, customers would be advised to entrust their cryptocurrency to “approved and compliant vendors”, which implies more centralization.
After all, the main selling point of cryptocurrency is that individuals can store their money in a wallet which only they control. There is no need to give up power over one’s finances to a centralized vendor which is closely monitored by the Bank of Mexico. Although the government can’t force anyone to do that, rest assured it will do everything in its power to make that option as enticing as possible. If consumers don’t control their own crypto, the central bank and government will have a lot of power over them once again.
Moreover, once cryptocurrency balances are in the hands of regulated institutions, this information will be shared with other government agencies. There is no valid reason why any government entity should have to know how much cryptocurrency every Mexican citizen is holding. Granted, for tax purposes, this would make things a lot easier for everyone involved. However, there is no official plan to tax cryptocurrency in Mexico right now, which would render this scenario moot altogether. It’s an interesting situation worth keeping an eye on; that much is evident.
For the time being, we will have to wait and see if the FinTech Law actually passes Mexico’s Senate. It is not unlikely this will occur, though. If it does, the country’s central bank would create additional regulations concerning cryptocurrency in general. It is unclear what those guidelines would entail exactly, yet it seems there is no active plan to prevent Bitcoin and altcoins from thriving in this country.