Mexico’s Congress approves cryptocurrency legislation

Mexico has now become a member of a small collective of governments that have established regulation for the cryptocurrency industry.

In a vote of 264-61, the Central American country’s Lower House of Congress approved a bill last Thursday that will regulate crowdfunding and cryptocurrencies companies. With the legislation, Mexico is one of only a handful of countries that has taken an official position regarding the digital currency.

The bill was submitted to promote financial equilibrium in the country, as well as to set the groundwork to prevent money laundering. It was approved by the Senate last December and now will be put on President Enrique Pena Nieto’s desk for his signature. The president took to Twitter to put his support behind the bill, saying that it shows a modernization of the financial system in Mexico.

With the laws, fintech companies will have better-defined laws surrounding issues like crowdfunding and payments. One key component is the authorization of open banking for the industry. Open banking allows user information to be shared by financial institutions through the use of public application programming interfaces (API).  Fintech Mexico’s president, Francisco Mere, was quoted by Reuters saying that open banking “recognizes that the information in the hands of the financial institutions is the property of the user, not the institution’s, and that it can be brought to other financial intermediaries.”

Information currently gathered through APIs used at larger banks will be made available to small and medium-sized banks as well as startups, assuming that the information was authorized for release by the banks’ clients.  According to Mere, “This will allow better services, better costs and more inclusion.” It will also help provide a bridge between the fiat and the cryptocurrency financial institutions.

The bill was drafted to provide an overview of cryptocurrency functions in the country. There will be additional laws introduced in the near future, which will provide further details and clarification for companies working in the cryptocurrency industry. These details will be provided by Mexico’s securities regulator, the National Banking and Stock Commission, in conjunction with the central bank and the ministry of finance.

The Federal Commission of Economic Competition (FCEC) in Mexico also supported the bill, saying that it will provide a greater amount of certainty in the cryptocurrency community. When the bill was introduced last October, the FCEC was the body that recommended the inclusion of API information for distribution to the fintech industry. It additionally recommended that financial institutions be given the discretion to block the information to fintech entities as it deemed necessary. This was more than likely included to help protect customer data in the event a fintech company was thought to be conducting underground activities.