Mexico’s legislature has proposed a bill that will regulate companies that interact with bitcoin and other cryptocurrencies, along with the wider financial technology sector.
Regional news source El Economista reports that, contrary to discussions earlier this year, the legislature will not regulate cryptocurrencies themselves. Noting that bitcoin is not backed by any central bank, the government unsurprisingly ruled out making it legal tender. Nor does it govern the purchase and sale of cryptocurrency. Rather, the bill will focus on firms that operate within the digital currency ecosystem.
As reported in Fortune, the proposed bill does not list specific details about the bitcoin regulations, giving the central bank broad authority to regulate companies operating within this space. However, it claims that these regulations will drive innovation and competition by establishing a clear operational framework.
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From the bill draft:
This (legislation) recognizes the need that a sector as dynamic as that of technological innovation needs a regulatory framework that allows authorities to mitigate risks and allow for growth in a competitive environment.
Because more than half of Mexico’s approximately 125 million citizens do not have bank accounts, many industry observers believe that financial technology startups can make headway in this emerging economy much faster than in developed countries with legacy financial systems firmly in place. To wit, banking giant BBVA partnered with Ripple to successfully send a money transfer from Spain to Mexico using a blockchain earlier this year.
Recognizing this–and echoing concerns expressed by regulators in many other countries–the bill targets money launderers and terrorist organizations who allegedly use cryptocurrency to circumvent the law. Mexico’s approach is much more conciliatory than that of China, which issued a blanket ban on initial coin offerings and has begun to shutter bitcoin exchanges.
“The regulation is good news for all companies in this sector because … growth will be greater with clear rules,” crowdfunding firm Yotepresto founder Luis Ruben Chavez is quoted as saying.
Before the bill goes to the Senate, it must pass an examination by an independent commission. After moving through the commission and passing the Senate, secondary laws will be written to provide specific regulatory guidance.
Featured image from Shutterstock.