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- Mexico’s Finance Minister cannot consider cryptocurrencies as legal tender under the current financial system.
- The Central Bank of Mexico, along with the finance secretary and the National Banking and Securities Commission, also said that cryptocurrencies are not legal tender.
- financial institutions can invite crippling sanctions for dealing in cryptocurrencies
Just after Mexican billionaire Ricardo Salinas Pliego stated that his bank would accept cryptocurrency, Mexico’s finance minister has confirmed that Bitcoin and other forms of cryptocurrency are banned from the financial system.
Arturo Herrera, Mexico’s finance minister, was giving a presentation to the Financial Action Task Force (FATF), a global anti-money laundering group. He said that the ban on cryptocurrency would stay for some time in his country. He added that cryptocurrencies could not be considered legal tender under the current financial system.
The reiteration by the Mexican Finance Minister comes after a statement by billionaire Ricardo Salinas Pliego who is also chairman of Grupo Salinas, Banco Azteca bank’s parent company, indicating that he is working to make the first bank in Mexico to accept the cryptocurrency. Herrera’s comments are being linked to Salinas’ pledge.
Herrera added that his secretariat would release a four-page communique that details the government’s stand on cryptocurrencies.
Financial entities have warned that cryptocurrencies are illegal.
The Central Bank of Mexico, along with the finance secretary and the National Banking and Securities Commission, have all said that cryptocurrencies are neither legal tenders nor have any semblance with fiat currencies. All the financial entities have warned that cryptocurrencies are illegal. In the past, the three pillars of financial regulations in Mexico have warned the public about the risks associated with cryptocurrencies. The warnings were issued in 2014, 2017, and 2019 about the risky nature of crypto assets as a form of exchange, store of value, or other forms of investment.
The four-page communiqué also said that financial institutions in Mexico could not deal with crypto assets such as Bitcoin, Ether, Dogecoin, Litecoin, and others. As a result, financial institutions must maintain distance from them.
The communiqué warned that if financial institutions conduct or offer operations with virtual assets without authorization, it will violate the regulations and invite crippling sanctions.
Mexico is also the headquarters of Bitso, the largest cryptocurrency exchange in Latin America. The company in May had raised $250 million in its Series C funding round and reached a $2.2 billion valuation.
The latest statement from Mexico’s Finance Minister confirms that Mexico is one more nation that has barred the collection of money from the public via blockchain or distributed registries, known as stablecoins.
Cryptocurrency is facing opposition in several countries. China has a crackdown on cryptocurrency mining. The Global number one crypto asset, Bitcoin values have halved in the past two months after hitting a peak in April. Other crypto assets have not fared any better, with the second-most valuable cryptocurrency, Ether, also seeing a steep fall in recent months. China’s crackdown on cryptocurrencies is said to have caused the tanking of values of Bitcoin.
China has, over the years, accounted for a large percentage of crypto mining operations. Crypto mining is an energy-intensive process, and miners were lured to start mining in China because of the availability of cheap power.
Numerous nations have started putting curbs on cryptocurrency because it threatens the native fiat currency and well-entrenched financial regime. Cryptocurrency is a highly decentralized platform that helps to bypass the riff-raff of current economic systems.
Turkey is another nation that has applied the brakes on its cryptocurrency trade. It has used stringent money laundering and terror financing regulations on cryptocurrency trading. It has left the Turkish cryptocurrency industry in a fix as they face surging inflation and falling values of its domestic currencies. In a presidential decree of May 1, cryptocurrency exchanges were included in a list of institutions that must operate under stringent anti-money laundering and terrorism regulations. The laws will be effective immediately.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
