Mexico may not be following El Salvador's example on Bitcoin... yet

Published at: June 28, 2021

Authorities behind financial regulation in Mexico have warned against financial institutions handling cryptocurrencies, saying digital assets are still not considered legal tender in the country.

In a Monday press conference, representatives from Mexico’s finance ministry, the Bank of Mexico, and the National Banking and Securities Commission issued a joint statement warning investors virtual assets carried inherent risks as a medium of exchange and store of value. They added that any financial institution based in Mexico is “not authorized to carry out and offer to the public operations with virtual assets,” specifically mentioning Bitcoin (BTC), Ether (ETH), and XRP.

The country’s financial regulators and central bank seemed to be targeting Ricardo Salinas Pliego regarding his recent Bitcoin announcement. The third richest person in Mexico said on Sunday that he was exploring the possibility his bank, Banco Azteca, would accept Bitcoin in an apparent effort to promote widespread adoption.

However, finance minister Arturo Herrera said financial systems in Mexico are prohibited from using cryptocurrencies, a policy that was unlikely to change in the near future. The authorities added that they would follow the evolution of cryptocurrency as well as the potential uses of its underlying technology, but still referred to digital assets as volatile, speculative, and a less effective medium of exchange than fiat.

While Mexico is taking a seemingly strong anti-crypto stance, its neighbors have done the opposite by promoting crypto as a valid currency and encouraging businesses to accept Bitcoin. Earlier this month, El Salvador passed legislation declaring Bitcoin would be accepted as legal tender, while Paraguayan congressperson Carlos Rejala said he would be introducing a similar bill in his country’s national parliament on July 14.

Though at least two lawmakers in Mexico promoted proposing a legal framework for crypto following El Salvador’s move, the announcement from financial regulators Monday suggests some authorities are still hesitant about the idea. Last year, the head of Mexico’s finance ministry’s financial intelligence unit reported that cartels had been increasing their use of crypto to launder funds and said the country’s law enforcement lacked the resources needed to tackle money laundering when crypto was involved.