Mexico’s central bank governor rejects bitcoin as virtual currency

Banco de Mexico Governor Agustín Carstens has ruled out identifying bitcoin as a virtual currency.

Instead, the banker said the cryptocurrency should be classified as a commodity because there is nothing to ensure its accounting in a financial system as it is not supported by any central bank or government. Speaking to students at the Instituto Tecnológico Autónomo de México (ITAM), Carstens argued that managing instruments like bitcoin is a cybersecurity issue because “they are not necessarily immune to hacking” and because they offer “users anonymity,” Mexican newspaper El Economista reported.

And bitcoin, being a “product of technological innovation,” should be implemented in tandem with regulation by the financial regulators, Carstens said in his presentation, according to the report.
“This technological development in the financial system cannot be the result of innovation alone. There must be a free step that does not cause problems to the financial system that in the end affect the whole society,” the bank governor said.

Carstens comments, misguided they may be, are line with the Mexican government’s negative views on digital currencies, especially bitcoin. In 2014, the Bank of Mexico restricted banks from using bitcoin, which it said was not considered legal tender in the country. However, there is no denying that Mexico is experiencing a growing interest in bitcoin trade, and digital exchanges are thriving in country especially following reports that U.S. President Donald Trump is looking at stopping undocumented Mexicans in the United States from sending money home.

Mexico isn’t alone in its struggle to fit bitcoin within its existing regulatory frameworks—after all, bitcoin is its own thing. Carsten’s limited understanding of bitcoin and digital currencies aside, there are indications that the Mexican government is interested in regulating “las tecnologias financieras,” also known as fintech.

Carsten said “financial authorities will soon present” proposed laws to regulate fintech, although whether Mexican regulators will classify bitcoin as a commodity or a currency still remains to be seen.