25 Mar 2019
Banco de Mexico, Mexico's central bank, has decided to use the new powers granted by a recently introduced fintech law to make it almost impossible for cryptocurrency exchanges to operate in that country. The reasoning given for this proposed legislation, which is currently under review, is that the central bank believes that the end user should be "prevented from being exposed" to "dangerous virtual assets on the grounds of their complexity and volatility".
The CEO of local crypto exchange company Isbit had this to say:
“This is a disaster. The people within Banxico have really shown their ignorance about the subject they are trying to regulate.”
He added that the proposal was put out in an unfinished state with "lack of analysis and basic competence" and that it left too many important things up to interpretation, rather than strict definition.
He gives an example of the definition of consumer missing from the document. He is of the opinion that "financial institutions and foreign trade companies are not a ‘consumer’ and thus can operate freely with his exchange".
There have been outcries from various crypto focused advocacy groups, most notably CoinCenter.org. In an OpEd by Jerry Brito and Peter Van Valkenburgh, they explain in length how the new legislation hurts crypto in general, not just in Mexico. They particularly damned the reason Banxico gave for its virtual prohibition of crypto exchanges.
If crypto is so complex that it should be clamped down on so much, they argue, then what about cars? How about SSL on websites? Should all those things be banned because the average person does not how to engineer a car, or how to understand the mathematics behind 256bit AES encryption?
The attitude shown by Banxico, Brito and Valkenburgh continue in the OpEd, is "aggressively paternalistic" and assumes that the average Mexican does not have the mental capacity to make their own, informed decisions.
They finished by saying that Banxico would only put the average Mexican consumer at risk, due to the unavailability of a local cryptocurrency exchange would lead to interested parties buying crypto over the internet where there is no regulation.
Coin Metric's Nick Carter sees the Mexican story as proof of his earlier predictions that countries would start clamping down on Bitcoin and cryptocurrencies in general. He adds that the states who do embrace Bitcoin will benefit tremendously from those the criminalization of the same but that ti would lead to large changes in digital culture.
However, not all banks are looking to make things difficult for the cryptocurrency. The Central Bank of Sint Maarten and Curacao revealed last fall that they intend to open a pilot program for their very own central bank cryptocurrency.
The Bank's treasurer, Cedric Pietersz, was adamant that the bank would take bold and decisive steps to embrace the technology behind cryptocurrencies. That way they would have a competitive advantage to other banks when it comes to ICOs and other related services.
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