Mexican Law Would Give Central Bank Oversight of Cryptocurrency Startups

Mexico's government is close to introducing legislation that would regulate fintech firms, including those that work with cryptocurrencies.

The latest draft of the bill, according to reports from regional newspaper El Economista and Reuters, would clarify that cryptocurrencies like bitcoin are not legal tender in Mexico. Further, the legislation would give the Bank of Mexico, Mexico's central bank, the power to regulate firms working with cryptocurrencies.

The draft states (according to a translation):

"[Financial technology firms] can only operate with virtual assets that are determined by the Bank of Mexico through general provisions. To carry out operations with such virtual assets, they must have the prior authorization of the Bank of Mexico."

The text of Mexico's fintech bill has been circulating since this spring, focused on companies that provide "alternative means of access to finance and investment" – including those dealing with digital assets and cryptocurrencies. An earlier draft, released back in March, had reportedly contained rules focused on "institutions dedicated to the purchase and sale of virtual assets," though that language has now been dropped.

According to recent statements from Mexican President Enrique Pena Nieto, the legislation will be introduced by September 20. Reuters reports that it will first be considered by an independent commission, after which it will be sent to the Mexican Senate for further deliberation.

Agustín Carstens, governor of the Bank of Mexico, has previously stated that unless cryptocurrencies such as bitcoin are recognised by a bank or government, they do not meet the definition of a currency.

At a lecture at Mexican technical university ITAM in August, Carstens argued that "technological development in the financial system cannot be the result of innovation alone", but must occur in tandem with new regulations.

Mexican pesos image via Shutterstock