On March 10th, the Bank of Mexico published new regulations to govern cryptos. The rules, according to insiders from within the country, are bad for the economy. Banxico has issued some fintech regulations that seek to rein in the crypto and blockchain sectors in the country.
‘A Healthy Distance’
According to Impractical, a news outlet, Banxico is aiming to ensure that companies which deal in cryptocurrencies keep them at ‘a healthy distance’ away from fiat currencies.
In addition to improving the oversight about the flow of money, the bank also seeks to create fresh guidelines that will guide how crypto money is sent abroad. Currently, there is extreme ease with which money goes out of the country. Once it is out of Mexico, the money is out of the central bank’s regulatory reach.
The crypto regulations also detail that the central bank is seeking to increase its regulatory power. They require that companies which wish to conduct their businesses in crypto should apply for a permit from Banxico.
In addition, there will be similar rules governing cryptocurrency remittances as those which cover e-money and credit card cash remittances. The bank is currently waiting for feedback from industry players.
Uproar over the Proposed Regulations
The proposed regulations have caused an uproar from key industry players. Thomas Alvarez, the CEO of the Volabit crypto exchange, has pointed out that the new rules are vague. They are also contradictory.
One instance of the contradictions is a law which states that institutions may only deal with internal cryptocurrency transactions that have been approved by the Bank of Mexico. In the same breath, the law states that the said institutions will not be eligible for getting this authorization.
A ‘Catch-22’ Scenario
The law also requires that the exchanges should get licenses before setting up shop in Mexico. An exchange operating without a permit would be doing so illegally. In the same vein, the laws state that exchanges that have a license are not permitted to list virtual currency assets. Hence, it defeats the purpose of the exchange.
Per Thomas Alvarez,
This is a catch-22 type of situation.
Sebastian Acosta Checo, the CEO of Isbit, noted that the regulators clearly do not understand how the crypto industry works. The new laws make it impossible to do business in the country. According to Checo, they are detrimental to the blockchain technology and the economy of Mexico as a whole.
Do you think Mexico’s new laws make sense? Let us know in the comments section below.