The Law to regulate Financial Technology Institutions or Fintech Law allows cryptocurrencies through sandboxes or “novel models.” Experts point out that there is no list published by Banxico where it authorizes the operation of cryptocurrencies and the central bank “has the last word.” Bitso reported that $2.1 million was sent on its platform in the first three quarters of 2022 for cross-border payments alone.
The Law to regulate Financial Technology Institutions or Fintech Law of Mexico came into force in March 2018 since then, seeking to regulate innovative financial services and promote competition. It is applicable for companies that offer crowdfunding services, loans, digital transfers and cryptocurrencies.
The Mexican Fintech Law was a pioneer in the region in establishing a clear legal framework for collective financing institutions, electronic payment fund institutions and companies authorized to operate with innovative models. The latter allows the provision of service through a sandbox that allows the experimentation of “new” financial modalities to the existing ones.
Fintech Law: They See “Unclear” Regulatory Framework towards Cryptocurrencies in Mexico
Months ago, tech firm Legal Paradox founder, Carlos Valderrama, explained that there were more than eight requests for innovative models via sandbox to experiment with digital currencies, but they have not been attended to. Therefore, there is no optimal legal framework in the country that allows financial solutions with technologies such as blockchain.
Article 16 of the Fintech Law stipulates that FinTech or startups may carry out operations with virtual assets, but must be subject to the terms and conditions of Banxico. Meanwhile, article 22 establishes that electronic payment fund institutions must inform the National Banking and Securities Commission (CNBV) when they receive digital assets.
Banxico Has Not Allowed the Legal Operation of Cryptocurrencies in Mexico
Companies are compelled to comply with regulator monitoring, as well as additional obligations such as files, corrective actions, guarantee actions, among others. Likewise, they must have corporate governance, and must report to financial authorities.
Carlos Valderrama explained that “there is a lack of will” on the part of financial authorities to develop experimental or sandbox schemes that allow the controlled circulation of cryptocurrencies. The Law to regulate Financial Technology Institutions could only operate with virtual assets that are determined by Banxico.
Experts have pointed out that Mexico’s Fintech Law has solid bases to regulate the use of cryptocurrencies. The founding partner of BlackBox, Víctor Aguirre, explained that there is no list published by Banxico authorizing the operation of cryptocurrencies. The “push” from the central bank would be decisive for the ecosystem.
Fintech Law: Remittances and Salaries, the Largest Use of Cryptocurrencies in Mexico
Article 30 (chapter III) of the Fintech Law maintains that Banxico is the only one authorized to establish deadlines, terms and conditions for the operation of virtual assets. Meanwhile, platforms that operate virtual assets are required to have all of the client’s funds, ready to be withdrawn when the user determines.
In addition, article 105 shows that Banxico would determine as “serious conduct” for a platform to use clients’ money, electronic payment funds or virtual assets for purposes other than those agreed upon. In short, the business model of a large part of the cryptocurrency exchanges in Mexico would be unviable.
The Mexican exchange indicated that in the first three quarters of 2022, more than $2.1 million were sent through the platform, for cross-border payments. Additionally, it launched its “best practices” regulatory principles for the industry.
By Leonardo Pérez
