Sebastian Acosta Checa (SC): The first draft of this financial technology law was presented by the Secretary of Credit and Public Finance of Mexico, Jose Antonio Meade, in the 80th Mexican Banking Association Convention, held in Acapulco on March 23. In accordance with this law, the central bank will define the regulation that applies to digital assets such as Bitcoin.
Mexico's New Bill Could Be A Game Changer for Bitcoin Jose Antonio Meade, Secretary of Credit and Public Finance of Mexico This legislation is being promoted by the Executive Branch but it still needs to be approved by Congress. Nevertheless, I have noticed wide consensus across political parties about how this can benefit the economy, trigger more foreign investment and help our industry grow.
How Mexico Will Define Bitcoin
SC: The central bank will define what a ‘digital asset’ is by following basically two criteria. The first criteria is the widespread adoption by the public (high market cap) and the second is the protocols, rules, and mechanisms that allow generation, identification, division and control the replication of such units of account.
Requirements for Bitcoin Exchanges
This section of the law explains that digital assets management institutions must be Mexico's New Bill Could Be A Game Changer for Bitcoinsolvent and cannot operate under fractional reserves. Companies such as ISBIT are required to hold all the deposits of their clients, unlike banks that are capable of lending part of the deposits they obtain.
No, it would be completely unreasonable for the regulators to expect exchanges to hold the equivalent amount of value in fiat currency to match the digital asset deposits. That would kill our business model.Mexico's New Bill Could Be A Game Changer for Bitcoin.
The intention of the regulators is not to kill the industry but rather to establish rules that will give more consumer protection and foster a safe path to mass adoption.
SC: The bill will be presented in the course of the next 2-4 weeks in the Congress of Union. I expect it to take several months for this law to pass. Nevertheless, it is very important for Bitcoin and blockchain tech companies to be prepared because, according to the draft, it will become effective from the first day it is published in the Official Journal of the Federation.
Potential Effects on Bitcoin Adoption in Mexico
SC: This regulation will give our industry a boost. Regulated bitcoin exchanges will be considered part of the financial system and will be able to integrate with many aspects of the economy.
Now consider the Pension Plans Administrators in Mexico (AFORES). This institution has assets under management in excess of 4,004,702,000,000 MXN (about $215,306,559,139 USD). Some pension plan administrators have started to expand their horizon of investments, given the bad performance they all had in the last few months. Some have discovered bitcoin’s great performance over the years, but could not justify taking positions in the market… until now.