Mexican Authorities: Cryptocurrencies Can’t Be Used Within the Financial System

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In Brief
  • Mexican financial authorities disallow cryptocurrencies from being used within the financial system.

  • Mexico’s central bank also warned users about investing in the asset class.

  • Cryptocurrencies are popular in Mexico, and it is unclear how much of an impact this will have on the market in the country.

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Mexico’s central bank and other financial authorities have said that cryptocurrencies can’t be used within the financial system, as per a document published recently.

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Mexican financial authorities have reiterated their stance on cryptocurrencies — disallowing them from being used within the financial system. Banco de México, Mexico’s central bank, in a document jointly published with the National Banking and Securities Commission, referred to the position. Finance Minister Arturo Herrera Gutierrez also endorsed the new rule in a post published on Twitter.

The document likely comes as a result of Mexican billionaire Ricardo Salinas Pliego saying that he was working to make bitcoin accepted in his bank Banco Azteca. Besides emphasizing the prohibition of use in the financial system, the bank also warned users about investing in cryptocurrencies. The new warning appears sterner than previous warnings issued by Mexican authorities.

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Gutierrez also does not constitute legal tender under the current legal framework, and nor are they currencies. The official spoke to the Financial Action Task Force (FATF), which has been picking up its efforts to scrutinize the crypto market.

Cryptocurrencies are popular in Mexico, and it is unclear how much of an impact this will have on the market in the country. The ban isn’t an outright ban of cryptocurrencies — individuals can still hold crypto — but it will be interesting to see how this affects the regional market.

Mexico is also home to Bitso, the largest exchange in the region. It is proving to be highly popular and successful, with over two million users so far. There has been no comment from industry insiders in the region.

Countries now taking varied approaches to crypto market

Mexico now joins China in effectively banning cryptocurrencies from being used, with the latter ordering financial institutions in the nation from facilitating financial transactions related to cryptocurrencies. These are among the more blunt directives issued by authorities.

Simultaneously, some other countries are taking a big step forward with cryptocurrencies. Most notably, El Salvador has made bitcoin legal tender, though this has come with a few challenges. However, the vast majority of the world is still undecided about how to handle the cryptocurrency market.

Nations like Japan and South Korea are taking a more tempered approach to the market. Both countries are imposing stricter regulations on exchanges and the market, but not going so far as to make bans that would render the asset class more impotent.

The U.S., meanwhile, is strikingly quiet when it comes to direct orders concerning the crypto market. It appears that it is focusing on a broader regulatory framework, with perhaps even a central bank digital currency (CBDC) initiative in the works in the background. Many countries look to the U.S. for guidance on this matter, so any action the U.S. carries will likely have an enormous impact.

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Rahul's cryptocurrency journey first began in 2014. With a postgraduate degree in finance, he was among the few that first recognized the sheer untapped potential of decentralized technologies. Since then, he has guided a number of startups to navigate the complex digital marketing and media outreach landscapes. His work has even influenced distinguished cryptocurrency exchanges and DeFi platforms worth millions of dollars.

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