Mexico’s New FinTech Rules Go Against Blockchain Progress

The Bank of Mexico brought in a new Fintech law that somewhat fights the progress of blockchain and related financial technology improvements in the country. In fact, this could cause the shutdown of around 201 cryptocurrency-related startups, reports CoinDesk.

Interestingly, this law came out back in 2018 but hasn’t seen any enforcement until now. What it does is go after crowdfunding and e-payment platforms, reports the publication. That said, around 57% of these affected companies are trying to fight the change. All they want is to be able to work with the National Banking and Securities Commission (CNBV) of Mexico.

Essentially, what this law does is make it so startups have to generate around $100,000 a year to comply. On top of this, they have to pay tons of fees and other compliance charges to operate, which can run them over $35,000 – a high bar of entry, for sure.

On top of this, a somewhat recent update to this regulation claims that fintech companies can’t even hold or trade cryptocurrencies, lest they face fines.

Josu San Martin, once Director at Mexico’s Secretary of Finance and also Fintech México, says that regulation processes have been all over the place in the country:

“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.”

Conversely, these high fees are forcing startups to rush to make money early on, says one Alberto Navarro, the CCO of blockchain consultant Lumit:

“Usually the first thing they ask us for is to create a cryptocurrency to raise funds with, which comes with a very high legal risk.”

Regardless, the publication claims that Bitso, the largest cryptocurrency exchanges in Mexico, was able to acquire a license and has over 700,000 customers buying cryptocurrency all the time.

Meanwhile, unregulated automated trading robot scams like Bitcoin Code, is threatening the industry’s growth and positive reputation.