The Bank of Mexico has published its long-awaited cryptocurrency regulation, but it has come under scrutiny by some crypto experts in the country. According to the CEO of a local crypto exchange, the impact of the law goes beyond the crypto sector, and he believes it is a disaster, with the central bank showing that it has little knowledge of digital currencies.
Bank of Mexico shows its ignorance on crypto
The cryptocurrency community in Mexico are against the regulations put in place by the Bank of Mexico (Banxico), the country’s central bank which would also affect how financial technology institutions (FTIs) in the country would approach the emerging market.
The CEO of crypto exchange Isbit, Sebastian Acosta Checa, revealed that the circular had instructed the FTIs in the country to stop their customers from being exposed to the terrible dangers of crypto assets due to their volatility and complexity. This implies that Banxico is trying to prevent financial institutions in the country from offering crypto assets to their consumers, he added. According to Checa, the circular is a disaster as the people in the bank have shown their ignorance regarding cryptos which they are trying to regulate.
In March 2018, the country’s congress passed a law to regulate the crypto and fintech companies in the country, with Banxico tasked with determining which cryptocurrencies would be made available to the public by regulated bodies. Back then, the crypto community in the country had hoped that Banxico would introduce favorable rules to boost the fintech sector.
However, the central bank published its circular which essentially dictates that financial companies would not be authorized to offer cryptocurrencies to their customers.
Operations with crypto not prohibited
While the contents of the circular come as a blow, crypto exchanges in the country don’t see it as preventing them from carrying out their activities. Crypto exchange Bitso in a blog post stated that the circular was meant for banks and fintech companies regarding how they should approach digital currencies.
The central bank requires crypto exchanges to become regulated financial bodies, but once they obtain the license, they would not be allowed to list or trade any cryptocurrencies, making it almost impossible to operate a digital currency exchange in the country.
Checa pointed out that some of the rules imposed by Banxico are not clear. He stated that “Since the circular seems to have been written in a rush and without careful analysis and basic competence, it leaves to the interpretation of certain important things.
In his understanding, financial institutions and foreign trade firms are not considered as consumers and thus are allowed to operate freely with crypto exchanges. For that reason, Isbit is shifting its focus to now target businesses, corporations, and other institutions that are allowed to hold or trade cryptocurrencies. This will ensure that they would continue to be in business, he added.
The crypto community could appeal against the new rules
Checa believes that the best way for crypto exchanges to survive and thrive in the country is for them to call to the Amparo Law and ask the court to stop the application of Banxico’s circular. He pointed out that the March 9 billion passed by Congress gives them the right to operate with consumers for a few more months.
In addition to that, the CEO of Isbit is of the view that the new rules will affect the economy negatively. He stated that Mexico is aiming to become the most significant remittance region in the world, but it could not achieve that if such strong rules are applied. He believes that Mexico has a lot to gain if they could favorably adopt cryptocurrencies to help out in trade, tourism, and other aspects of the economy.