Crypto Regulations In Mexico 2024

Mexico ranked in the top 20 in the world in 2023 in terms of crypto adoption based on the total transaction volume. Mexico stood out in crypto adoption as it surged by 18% year-on-year within Bito’s platform, a Mexican crypto exchange boasting 8 million users globally. As Mexico ranks 16th in the global crypto adoption index, the region showcases promising signs of adapting to the virtual era of currencies. 

In this report by Coinpedia, we will uncover the current regulatory framework operational in Mexico! Let us read through it.

Crypto Adoption in Mexico

Mexico has advanced by twelve positions in the adoption over the past year, effectively securing the 16th spot in crypto integration, according to Chainalysis’ Global Crypto Adoption Index. The report indicates improvements in the areas of centralized services adoption, retail engagement, P2P exchanges and the value of decentralized finance.

Here, regulatory concerns have been a major thing which obstructs crypto adoption in Mexico. The absence of a cohesive regulatory framework from Mexico’s central bank, Banxico, has distracted nationals from fully adopting crypto as a part of their financial portfolio. Let us know more about how crypto is regulated in Mexico.

Crypto Regulations In 2024

The primary regulatory framework looking after the acquisition, sale, custody and transfer of virtual currencies for financial entities is the “Law Regulating Financial Technology Institutions” or ‘Fintech Law’.

The Fintech Law defines a ‘virtual asset’ and establishes the major requirements for financial institutions to operate internally with this category of asset.

The Mexican Central Bank (Banxico) has also issued Circular 4/2019, which :

• defines the characteristics of the virtual assets with which institutions may operate
• establishes the terms, conditions and restrictions applicable to the transactions which financial institutions may carry out.

Also, Mexico’s anti-money-laundering/counter-terrorist financing regulatory framework takes care of the exchange and custody of virtual assets by non-financial entities. This regulatory framework is set out in the Federal Law for the Prevention and Identification of Operations with Resources of Illicit Proceeds.

Regulators might use blockchain technology in different industries. The only blockchain use case that involves certain complexities is virtual assets. 

While the Mexican regulatory framework is based on the principle of technological neutrality, in March 2019 the Financial System Stability Council, comprising six financial authorities, decided to absorb a conservative approach towards virtual assets, stating that a “healthy distance” should be maintained between virtual assets and the Mexican financial system. This position was confirmed on 29 June 2021.

On 28 June 2021, the main financial regulators, the CNBV, the SHCP and Banxico issued a joint statement in which they stated: 

• Virtual assets are not legal tender in Mexico 
• Financial institutions with prior authorisation from Banxico may carry out operations with virtual assets; however, they cannot obtain authorisation for operations through which they intend to provide exchange, transmission or custody services directly to customers
• No financial institution has been authorized to date

Taxation

Mexico has no active tax rule on cryptocurrency. The FinTech Law clarifies the nature of crypto by saying that it is not illegal but also not legal tender. Thus, crypto tax in Mexico can be taxed as movable property and not as cash or currency. There are ways in which crypto could still be treated and taxed accordingly. 

Crypto tax is levied on the net profit received in the sale of the crypto or if the held crypto was exchanged for another coin at varying rates from 1.92% to 35%. Capital Gains and income are taxed in the same manner in Mexico and there is no difference between these two. However, capital gains that are less than 90,000 Mexican pesos, might cover a noticeable number of crypto transactions.

Capital gains less than MEX$ 90,000 are exempt from taxes in Mexico. Yes, crypto transactions less than MEX$ 90,000 might not be taxable!

Legal Status Overview

In Mexico, Bitcoin is considered legitimate and is recognized as a means of payment and transmission of value, without being a legal currency. For instance, one may purchase a car for up to 3,210 times the minimum wage (TMW) effective in Mexico, approximately MXN $225,000 or USD $13,400 with Bitcoin.

Future Prospects and Challenges

Mexico is ranked number 16 in terms of crypto adoption based on transaction volume. We must notice that Mexico slightly prefers decentralized services over centralized services. Mexicans also increased the usage of crypto for P2P exchange, ranking at position 30 out of 146 in the world. We can call Mexico the next Latin America digital currencies hub! Mexico is emerging as a hotbed for crypto and blockchain innovations. 

Mexico can be the next big thing in Latin America when it comes to cryptocurrency!