Summary

• Mexico is on the forefront of bringing blockchain and token sales under the law
  • In March 2018, Mexico passed its innovative “Fintech Law” which will be used to regulate cryptocurrencies and token sales within Mexico
    • Regulation of token sales: As part of this law, the Bank of Mexico must officially authorize a cryptocurrency in order for it to be legally traded or sold in Mexico
    • Uncertain regulation of ICOs: ICOs emerged as a phenomenon after the draft Fintech Law bill had been prepared. Therefore the law does not include an explicit reference to ICOs

The March 2018 Mexican Fintech Law (source)

• In March 2018, Mexico’s lower house of congress approved a bill to regulate the financial technology sector. This bill is called the Law to Regulate Financial Technology Institutions (FTIs) (Ley para Regular las Instituciones de Tecnología Financiera) or the “Fintech Law”
  • This purpose of this law is to regulate the financial services being rendered through technological means and it is intended to:
    • Provide legal security to technological financial services users
    • Trigger greater competition in the financial services market
    • Increase the number of participants in the financial sector
    • Prevent money laundering activities through electronic means
    • Regulate the transactions with digital assets in Mexico
• Financial Technology Institutions (FTI) Requirements:
  • The law provides that in order for a company to operate as an FTI, it must first secure authorization from the National Banking and Securities Commission (CNBV) following a favorable opinion from the Interinstitutional Committee which is comprised of 6 members from the Ministry of Finance and Public Credit, the Bank of Mexico and the CNBV
  • FTIs must be stock corporations (sociedades anonimas) whose by-laws must accord with the provision of the Fintech law more details here
• Types of FTIs
  • The Fintech law creates two types of Financial Technology Institutions: 1) crowdfunding institutions and 2) electronic payment fund institutions (e-money):
    • Crowdfunding institutions are those aimed to bring parties together so that they may grant financing to each other. More details here
    • Electronic payment fund institutions engage in the activities of issuing, administering, redemption and transmission of electronic payment funds which are carried out through computer applications, interfaces, webpages and other platforms. More details here
    • Cryptocurrencies fall under this category as the Fintech Law defines a digital asset as “the representation of value recorded electronically and used by the public as a payment for all types of legal acts and whose transfer can only be carried out by electronic means, without the virtual asset being understood as a legal tender currency in the national territory, a foreign exchange or any other asset denominated in legal tender or foreign currency”
    • FTI’s may only trade with the digital assets that are defined by the Bank of Mexico, should inform their clients of the risks involved in conducting transactions with such assets
    • The Fintech Law gives the Bank of Mexico the authority to define the characteristics of the digital assets as well as the conditions and restrictions of transactions and other acts that may be carried out with such assets in Mexico.

Does the Fintech Law Regulate ICOs? (source)

• ICOs emerged as a phenomenon after the draft Fintech Law bill had been prepared. Therefore the law does not include an explicit reference to ICOs
  • The Fintech law only allows ITFs and credit institutions to operate with virtual assets authorized by the Bank of Mexico. This may limit the realization of offerings by ICOs as companies that launch ICOs generally a specific token for each ICO

Does the Fintech Law Regulate Token Sales? (source)

• Yes. Since the Fintech bill was signed into law in March 2018, exchanges have begun application licenses. For example, two exchanges in Mexico Bitso and Volabit have shared they are applying for licenses:
  • The Bitso website says: “Bitso S.A.P.I. de C.V., will request the respective authorization from the National Banking and Exchange Commission (CNBV) and, if applicable, from the Bank of Mexico (Banxico) in accordance with the term established in the general provisions issued for that purpose.”
  • The Volabit website says: “In terms of the eighth transitory article of the law to regulate financial technology institutions, the authorization to carry out operations within this platform of electronic payment funds is in process, so the current operation of the platform is not an activity supervised by the Mexican authorities.”
  • According to Token Arcade, the specifics of if and what crypto exchanges will need to change in order to comply with the upcoming requirements by the CNBV is uncertain

Digital Proof

• As of August 2018, there are no laws published on digital proof in Mexico

Sources

• Tokenarcade
• Gtlaw
• Deloitte