Mexico Central Bank Tightens Regulations For Cryptocurrency Operations

Mexico’s Central Bank, Banco de Mexico, has unveiled a new set of regulations that banks, crypto exchanges and other financial institutions must adhere to when dealing with cryptocurrencies. The new set of rules seek to bring sanity into an industry that is experiencing a lot of boom as people resort to virtual currencies as a means of legal tender.

A circular published in the official daily of the Mexican government makes it clear that the Central Bank is the only body authorized to issue crypto-related permits. Banks, financial institutions as well as other entities will thus have to seek authorization before engaging in any form of cryptocurrency operation.

To get a permit, a company must submit a business plan. The plan must detail the commissions the company intends to charge while handling cryptocurrencies as well as the mechanism put in place to verify the identity of people dealing in such assets. Identity verification is a must, given the growing concerns that people are increasingly turning to cryptocurrencies for money laundering purposes.

The Central bank has also warned banks against making cryptocurrencies available to users the same day they open an account. The restriction seeks to ensure that all due diligence is carried out on the people opening the accounts, as part of the verification process.

Financial institutions are also obliged to verify the identities of people handling and trading cryptocurrencies. Any assets or properties acquired by the use of cryptocurrencies are also to undergo validation checks, to ensure they comply with the countries laws as a way of preventing money laundering.

Institutions looking to handle or facilitate cryptocurrency related activities must have submitted their applications by September 11, 2018, according to the circular.  Those who did not apply prior to the deadline will be given an opportunity to do so in March of next year, as soon as a new fintech legislation comes into law.

The regulations comes into effect at a time when Mexico is experiencing a boom when it comes to cryptocurrency usage. Introduction of Fintech law next year should go a long way in strengthening people’s confidence which should see digital currencies gain even more traction, in the mainstream world.

Even as Mexico continues to embrace cryptocurrencies, some countries have continued to shun the blockchain applications on fears they are being used to fuel illicit activities such as money laundering and terrorism.