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Mexico is just one signature away from regulating cryptocurrency after a law setting out its position passed the lower house Thursday, Reuters reports March 2, 2018.

Combining new resolutions on Fintech more generally, including crowdfunding and various aspects of cryptocurrency businesses, the bill now only requires a signature from president Enrique Pena Nieto before it becomes law.

The exact details applicable to crypto companies will be specified at a later date as so-called ‘secondary’ laws, the current incarnation of the bill containing more generalized information agreed when it was approved by the Mexican Senate Dec. 5 2018.

As Reuters explains, the new landscape “will give Fintech companies greater regulatory certainty around issues such as crowdfunding, payment methods and rules surrounding cryptocurrencies such as bitcoin.”

Mexico thus joins a select group of major jurisdictions applying hard-and-fast rules to cryptocurrency.

For us it was a victory for the sector, because this is being done internationally,” Felipe Vallejo, director of public and regulatory policy at local exchange Bitso told Reuters in December.

This year has been marked by an increase in the efforts of governments worldwide to regulate cryptocurrencies.

South Korea’s hasty attempts to bring order to the market has so far achieved mixed successes. This week, Singapore’s central bank also announced it was “assessing” its cryptocurrency environment to see if regulation was necessary for “investor protection.”

Mexico’s bill to regulate Fintech institutions including cryptocurrency exchanges is expected to become law within “weeks,” according to local crypto exchange ISBIT. Daniel Luévano, the exchange’s director of operations, shared with news.Bitcoin.com what to expect from the new law, citing a leaked document he obtained from the recent meeting of regulators.

Also read: Indians Look to Buy Bitcoin Overseas as Regulations Tighten

Changing Mexico’s Crypto Landscape

Sneak Peek: Mexico's Regulations for Crypto Exchanges Expected in 'Weeks'

Mexico’s Chamber of Deputies will soon vote on the bill to regulate the country’s fintech institutions including cryptocurrency exchanges, which the Senate has already approved.

The bill “establishes a regulatory framework that regulates the platforms (called Financial Technology Institutions or ITFs)” which includes crypto exchanges, the document states. “The bill recognizes two types of ITFs: collective financing institutions and electronic payment fund institutions.”

News.Bitcoin.com (BC): Does the bill legalize bitcoin and other cryptocurrencies?
Daniel Luévano (DL): Bitcoin and other cryptos will not be legal tender. However, ITFs that the Bank of Mexico gives consent [to] will be allowed to operate with them.

BC: Can people legally use cryptocurrencies to pay for goods and services?
DL: Yes, they can!

BC: What are the most important changes brought about by the bill?
DL: Financial institutions will be able to operate with virtual assets, but also, they are allowed to invest in ITFs. ITFs will be constantly audited; everything must be transparent to regulators and consumers. AML/CFT [anti-money laundering/combating the financing of terrorism] practices will be a really important requirement for exchanges.

BC: What major changes to the existing Mexican crypto ecosystem will result from the bill?
DL: Changes in the Mexican financial ecosystem? Huge ones.

Sneak Peek: Mexico's Regulations for Crypto Exchanges Expected in 'Weeks'

ITFs will be considered just as important as banks. All trade finance companies will be operating with them.

Only 44% of people in Mexico have a bank account, while the rest only use cash. The amount of money and transactions that can migrate to crypto and its technology is huge.

Licensing & Approved Crypto

Sneak Peek: Mexico's Regulations for Crypto Exchanges Expected in 'Weeks'

BC: What is the role of the Bank of Mexico with respect to the crypto market going forward?
DL: They are more than open to keep new technologies [and] strengthen the Mexican financial ecosystem. They don’t want to lose control of things they still don’t understand widely, that’s why the Bank of Mexico will decide which virtual assets can be operated in the Mexican territory.

BC: Are crypto exchanges now required to get a license from the Bank of Mexico? What kind of authorization do they need?

DL:

Yes, now we will have an authorization as an ITF. But this is positive, because now all the financial institutions have permission to work with the now-called ITFs. Mainly, the authorization depends on how strong your security is, and several KYC [know your customer] and AML/CFT practices an exchange should have.

BC: Are there restrictions on what cryptocurrencies are approved in the bill?
DL: The Bank of Mexico will decide which ones [cryptocurrencies] are allowed to be listed on the exchanges.

They will decide according to Article 30 [which states that] “Bank of Mexico will take into account, among other characteristics, the public acceptance (its use, the trade of it, the storage, and the volume of transaction), other jurisdictions’ acceptance, other agreements, mechanisms, rules or protocols that allow to create, identify, partition, and control the replication of these assets.”

Penalties

BC: What are the penalties for non-compliance?
DL: The penalties are applicable only for the ITFs in case they don’t comply or they don’t follow the law. If you don’t have the authorization, the penalty is from 30k UMA to 150k UMA, according to Article 104 I. 1 UMA (Unit of Measurement and Update) = 80.6 MXN = 4.27 USD.

BC: When will this bill become law? And how long do exchanges have to comply?
DL: The bill will become law in the following weeks, as soon as the Chamber of Deputies votes for it.

Exchanges will have one year to comply.

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