Every day the adoption of cryptocurrencies becomes more visible in different societies. The enthusiasts of Bitcoin, Ethereum, Ripple, etc., are constantly increasing, and the financial authorities of each country are aware of this.
However, many of these institutions have reservations about digital currencies and have preferred. This is due to limit themselves to warning citizens about their dangers, such as the case of the Central Bank of Mexico.
Distance between digital assets and the financial ecosystem
Banxico, Mexico’s highest monetary institution, has repeatedly shown its position towards cryptocurrencies. Ensuring that they do not meet the necessary characteristics to be considered as money. In fact, on his official website he recommends that there should be, “A healthy distance between digital assets and the financial ecosystem.”
But the most important thing for the bank is, without a doubt, the risk involved in making transactions with digital currencies due to its anonymity. What was supposed to be an advantage between fiduciary money and cryptocurrencies, has become a double edged sword. Since it is anonymity that makes it easier for criminals to commit crimes using assets like Bitcoin.
Money laundering, tax evasion and financing of terrorism are the main crimes mentioned by the financial institution related to digital currencies. In addition, it warns cryptography users that they are also exposed to various risks, such as cryptojacking and ransomware attacks.
Lack of regulations of the cryptographic industry
Among the biggest risks, Banxico mentions the lack of regulations of the cryptographic industry. The institution has emphasized, like many other Central Banks in the world, that a joint legislative framework at the international level is necessary so that the regulations on cryptocurrencies are really effective. As long as this does not happen and each country has its own regulation, financial systems will be more vulnerable to destabilization from crypto industry.
However, despite all these considerations and warnings, in Mexico it is not prohibited to market with digital currencies. In fact, the country has a Fintech legislation that includes a section on this type of companies that operate with cryptocurrencies.
Adaption of financial rules to the cryptocurrency
For its part, Banxico decided that to mitigate the risks of money laundering, it was best to adapt its financial rules to those of the regulator of the Interbank Electronic Payment System SPEI. The result of this was that now the exchange houses must give information to the Central Bank about the identity of their users. Gradual reports of their operations and notices of any suspicious activity.
Of course, the cautious stance of the Central Bank of Mexico is seen by cryptographic enthusiasts as a simple fear that digital currencies will definitely change the financial system and institutions like this are no longer necessary. But there is still a long way to go before a scenario like this is possible.
Also published on Medium.