Mexico’s New Crypto Regulations are Making it Tough for Blockchain Entrepreneurs to Survive
- Mexico recently re-introduced a new law that has tightened the regulatory framework that currently encompasses the nation’s crypto industry.
- Despite the increased scrutiny, bitcoin adoption has continued to increase throughout Mexico — with the country’s largest exchange Bitso recently boasting that it now has around 700,000 bitcoin customers.
According to a report released a Mexican media outlet recently, a new fintech law brought into effect by the Bank of Mexico (Banxico) could force a total of 201 blockchain related startups to cease their ongoing operations permanently. The law in question was cleared last year but has only come into effect recently. It targets a number of crowdfunding and electronic payments services.
A number of crypto/blockchain business owners have applied for licenses with the Mexican National Banking and Securities Commission (CNBV). However, due to the high costs associated with meeting the required compliance standards, many startup owners have decided to fold up their operations.
A previous iteration of the crypto bill in question subjects entrepreneurs to a cryptocurrency ban as well as prohibits fintech firms from exchanging, transmitting, and holding crypto.
In regards to this entire development, Josu San Martin, Ex-Secretary of Finance and Former Director of Fintech México, stated that the government needs to modify its approach in regards to crypto otherwise the burgeoning market could die out in the near future.
“The bar was set too high. At first they were aiming for an open, inclusive regulation. At the end, the law came out very restrictive, especially for cryptocurrencies to the point where an exchange can’t work under the Mexican law”
A similar sentiment was also shared by blockchain consultant Alberto Contreras, who too is of the opinion that the high costs of regulation are pushing entrepreneurs to raise funds using a host of undesirable means (including ICOs).