Mexico: Virtual Currencies Comparative Guide

1 Legal and enforcement framework

1.1 In broad terms, which legislative and regulatory provisions govern virtual currencies in your jurisdiction?

The main regulatory framework governing the acquisition, sale, custody and transfer of virtual currencies for financial entities is the Law Regulating Financial Technology Institutions (‘Fintech Law').

The Fintech Law defines what is considered to be a ‘virtual asset' and establishes the specific requirements for financial institutions (ie, banks and fintech institutions) to operate internally with this type 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; and
• establishes the terms, conditions and restrictions applicable to the transactions which financial institutions may carry out.

Meanwhile, Mexico's anti-money-laundering/counter-terrorist financing regulatory framework governs 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.

1.2 In broad terms, which legislative and regulatory provisions govern entities that provide services relating to virtual currencies? Must they be registered or licensed by a regulatory authority?

This will depend on the type of entity that intends to operate with virtual assets and the activities that it intends to undertake. A case-by-case analysis is thus required.

If the entity is a financial institution, the applicable regulatory framework is the Fintech Law and Circular 4/2019. In this case, the only financial institutions that can operate with virtual assets are banks, fintech institutions and authorised financial entities within the regulatory sandbox.

The regulatory sandbox is a safe regulatory space in which financial and non-financial entities can provide a regulated financial service using an innovative model. An ‘innovative model' is defined by the Fintech Law as "a model which, for the provision of financial services, uses technological tools or means other than those existing in the market at the time the temporary authorisation is granted in terms of this Law".

For financial institutions to operate with virtual assets, the authorisation of Banxico is required.

For non-financial entities, the applicable regulatory framework is the Federal Law for the Prevention and Identification of Operations with Resources of Illicit Proceeds. This law regulates exchange activities and the custody of virtual assets. If a non-financial entity wishes to operate as a cryptocurrency exchange or provide crypto wallet services, it must register with the Tax Administration Service (SAT).

1.3 Which bodies are responsible for enforcing the applicable laws and regulations? What powers do they have?

• An inter-institutional committee formed by Banxico, the National Banking and Securities Commission (CNBV) and the Ministry of Finance and Public Credit (SHCP) is responsible for approving the incorporation of new fintech entities – specifically electronic payment fund institutions and crowdfunding institutions.
• Banxico is responsible for taking the necessary measures to:
• • preserve the value of the Mexican peso;
  • control monetary policy; and
  • promote the healthy deployment of the financial system, including the proper functioning of payment systems and wallets, setting forth the secondary legal framework that applies to them.

In particular, Banxico is responsible for authorising financial institutions to operate with virtual assets and for determining the virtual assets which financial institutions may use.

• The CNBV is responsible for:
• • supervising and regulating financial institutions within the Mexican financial system in order to ensure their stability and proper functioning; and
  • maintaining and promoting the healthy and balanced development of the financial system as a whole, with the protection of the interests of the public as paramount.
• The SHCP, through the Securities and Savings Banking Unit, formulates policies for:
• • the promotion, regulation and supervision of financial services, banking, credit, securities, assets and derived assets;
  • the protection of bank savings, savings and popular credit; and
  • the protection and defence of the financial services consumers.
• The Financial Intelligence Unit is a division of the SHCP which is responsible for identifying, preventing and combating all operations relating to money laundering and terrorist financing.
• The National Commission for the Protection and Defence of Users of Financial Services:
• • empowers users of financial services through education and financial inclusion; and
  • is responsible for strengthening mechanisms for the protection and defence of users of financial services in their relations with financial institutions, and generating conditions of user welfare that ensure substantive equity.
• Other relevant authorities include:
• • the National Institute of Transparency for Access to Information and Personal Data Protection, Mexico's data protection authority; and
  • the Energy Regulatory Commission, which regulates the energy industry in Mexico. This is relevant due to proof of work protocols.

1.4 What is the regulators' general approach to virtual currencies?

Regulators are open to the use of blockchain technology in different industries; they recognise the benefits it affords and welcome its application. 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 – comprised of six financial authorities – decided to adopt 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 ratified 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 as follows:

• Virtual assets do not constitute legal tender in Mexico and are not currencies under the current legal framework;
• 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; and
• No financial institution has been authorised to date.

The statement also described the stance of financial regulators towards so-called ‘stablecoins', confirming that:

• the issue of these collection rights against the issuer may be equated to the activity of the collection of resources, which is restricted to domestically regulated financial institutions; and
• no financial institution has been authorised to date to issue stablecoins.

Notwithstanding the above, the financial authorities have also acknowledged that it is important to facilitate the emergence of new technologies.

1.5 Has there been any notable enforcement action relating to virtual currencies?

As at the time of writing, there have been no notable enforcement actions in Mexico that have helped market participants to understand permitted or prohibited activities using virtual currencies. However, such actions are expected in the near future.

2 Definitions

2.1 How are ‘virtual currencies' defined in your jurisdiction? Have there been any judicial decisions which have helped to define virtual currencies or their interplay with the existing body of laws (eg, contracts law, property law)?

The Fintech Law defines ‘virtual assets' as follows: "an electronically recorded representation of value used by the public as a means of payment for all types of legal acts, the transfer of which may only be carried out by electronic means. Under no circumstances shall a virtual asset be understood to be legal tender in national territory, foreign currency or any other asset denominated in legal tender or foreign currency".

No judicial decisions that would help to define different virtual currencies have been issued as yet.

2.2 How are ‘initial coin offerings' and ‘security token offerings' defined in your jurisdiction?

There is no definition of ‘initial coin offering' or ‘security token offering' under Mexican law. It is possible that in the near future, due to the development of blockchain technology and the more generalised use of virtual currencies, the regulator will define and regulate these concepts.

Notwithstanding the above, if a virtual currency is considered a ‘security' under the Mexican securities framework, the Securities Market Law and its secondary provisions will apply.

2.3 Are stablecoins treated as virtual currencies in your jurisdiction or do they fall under an existing category (eg, electronic money)?

The only official communication from the financial regulators that has provided a degree of legal certainty about the legal nature of stablecoins is Official Release 039 issued by Banxico, the Ministry of Finance and Public Credit and the National Banking and Securities Commission. It states as follows:

The release aimed to distinguish the regulations applicable to cryptocurrencies, such as Bitcoin and Ether, from those applicable to fiat-backed stablecoins, such as TrueUSD. The regulations applicable to fiat-backed stablecoins are equivalent to those applicable to fiat transactions.

Notwithstanding the above, it is arguable that the regulation of algorithmic stablecoins is as yet unknown, and that the regulations applicable to crypto-backed stablecoins are thus the same as those applicable to virtual assets. However, specific analysis will need to be carried out on a case-by-case basis.

3 Virtual currencies market

3.1 Which virtual currencies have become most embedded in your jurisdiction? Does this vary depending on the specific use?

Given that Bitso – a unicorn and Mexican cryptocurrency exchange – claims to have a market share of more than 95% of the Mexican crypto market, the answer to this question is the virtual currencies that are currently listed on Bitso. These are:

• Bitcoin;
• Ether;
• XRP;
• TrueUSD;
• MANA;
• Aave
• Compund
• Chainlink
• Uniswap
• USD Stablecoins
• Dai;
• Litecoin;
• Bitcoin Cash; and
• Basic Attention Token.

In Mexico, virtual currencies are primarily used as a form of investment, so the main cryptocurrencies are primarily used for speculation.

However, other kinds of assets that are not being used as investments exist on the Mexican market, such as non-fungible tokens (NFTs), utility tokens and crypto commodities.

3.2 What different products and services are offered?

The adoption of innovation and technology is booming in both the private and public sectors.

Such innovation takes different forms and different trends are emerging – for example:

• the adoption of blockchain technology to generate digital diplomas and certificates;
• decentralised app developments;
• self-sovereign identity (SSI) solutions;
• automation of financial onboarding processes with SSI on-chain and off-chain;
• supplier procurement platforms;
• crypto wallets and exchanges;
• asset tokenisation;
• crowdfunding and wallets;
• the development of decentralised finance products;
• NFT platforms;
• remittances with stablecoins and Bitcoin;
• smart contract creation;
• supply chain automation;
• metaverse creation;
• decentralised autonomous organisations;
• energy distribution; and
• Project Cadena, an information exchange chain between the customs authorities of Mexico, Colombia, Peru, Chile and Costa Rica promoted by the LACCHAIN alliance. The LACCHAIN alliance is a programme for the development of the blockchain ecosystem in Latin America and the Caribbean, led by the innovation laboratory of the Inter-American Development Bank and integrated by leading blockchain organisations. The blockchain ecosystem being created in Mexico is positioning the Latin American region ahead of any other region in the world as regards the use of this technology – mainly in the fintech sector.

3.3 How are virtual currency service providers generally structured? How are they generally financed?

The market is divided into:

• custodial exchanges;
• non-custodial exchanges; and
• crypto-brokers.

To the best of our knowledge, Mexican users can perform decentralised finance operations only through Binance DEX and Mexo.

In Mexico, people exchange fiat currency for cryptocurrency and vice versa through exchanges, liquidity providers and brokers. All of these players are subject to the know your customer/anti-money laundering (AML) legal framework and must register with the Tax Administration Service (SAT) to comply with the applicable reporting requirements.

Many of these entities are primarily financed by angel investors or through seed rounds or series A rounds with different venture capital firms, such as:

• Pantera Capital;
• Grayscale Investments;
• Digital Currency Group; and
• Kaszek Ventures.

3.4 Are virtual currency trading platforms subject to a specific regulatory regime in your jurisdiction? Must they be registered or licensed by a regulatory authority? Does this vary depending on whether the platform accepts legal currency or whether the platform is custodial? Are virtual currency trading platforms subject to any form of ‘market abuse' regulation?

In general, a case-by case analysis should be carried out.

Under the Federal Law for the Prevention and Identification of Operations with Resources of Illicit Proceeds, activities involving the following are generally considered ‘vulnerable':

• the regular and professional offering of virtual asset trading by parties other than financial institutions, carried out through digital electronic platforms or similar;
• which:
• • manage or operate, facilitate or carry out purchase or sale transactions of such assets owned by clients; or
  • provide a means to safeguard, store or transfer virtual assets.

In this scenario, the platform must be registered with the SAT in Mexico and must report transactions that exceed a specified threshold.

If the activity consists of investment advisory services, it is considered a reserved activity for investment advisers and will be subject to the Securities Market Law. Registration with the National Banking and Securities Commission (CNBV) is required.

No distinction is drawn between custodial or non-custodial exchanges: if a platform facilitates the exchange of virtual currencies, it must comply with the AML regulations. If a platform operates with stablecoins, this is considered as a reserved activity for financial institutions – specifically, the collection of resources; therefore, authorisation to operate granted by the CNBV is required.

There are no specific regulations on antitrust or market abuse practices in the case of virtual currencies, so the general regulations of the following laws will apply:

• the Federal Economic Competition Law, in the case of non-financial institutions; and
• the Securities Market Law and general provisions, in the case of financial institutions.

4 Crossover with banking

4.1 How are virtual currencies positioned within the broader banking landscape in your jurisdiction?

The position of virtual currencies within the broader banking landscape in Mexico is limited to financial institutions, which may only operate with virtual assets with the prior authorisation of the Mexican Central Bank (Banxico) in their internal (back-office) operations.

Banks (credit institutions) and fintech companies (wallets and crowdfunding platforms) may carry out operations with virtual assets with the prior authorisation of Banxico or through the regulatory sandbox.

In addition, the virtual assets with which credit institutions and fintech companies may operate must have several characteristics – among other things, they must:

• be a unit of information;
• be uniquely identifiable;
• be fractionally identifiable;
• be electronically recorded; and
• not represent ownership or rights to an underlying asset or to a security.

4.2 What impact could mainstream adoption of virtual currencies have on the ability to control inflation in your jurisdiction?

Banxico is responsible for developing monetary policy and controlling the purchasing power of the national currency due to variations in inflation.

In that sense, with regard to the mainstream adoption of virtual currencies in Mexico, Banxico should consider the existence and use of virtual currencies in Mexico by the general public with a view to modifying its monetary policy, and should assess the positive and negative effects of the use of virtual currencies.

Banxico should also take all necessary measures to prevent the issue and general use of virtual currencies from having an inflationary impact.

4.3 What other implications could the mainstream adoption of virtual currencies have for the banking system in your jurisdiction (eg, with respect to payment services)?

In this particular case, two different scenarios could arise:

• the general adoption of virtual currencies by financial institutions and the general public; or
• the general adoption of virtual currencies by the general public, but not by financial institutions.

In the first scenario, the implications could result from the adoption of different business models, such as:

• interest-bearing deposits of virtual currencies;
• loans of virtual currencies; and
• insurance with virtual currencies.

In this case, financial institutions would have to generate security mechanisms to control the volatility of specific assets (eg, Bitcoin), and would have to promote overcollateralised products to control liquidity.

Relevant reforms to financial laws regarding the prudential supervision of financial institutions would also be required.

In the second scenario, the financial sector could be compressed due to the fact that other institutions – such as cryptocurrency exchanges and wallet providers – would control a major proportion of the transactions executed by the general public.

4.4 Regarding decentralised finance, do the banking regulations in your jurisdiction apply to loans of virtual currencies or interest-bearing deposits of virtual currencies? Does this vary depending on whether stablecoins are loaned or deposited?

In Mexico, the adoption of decentralised finance (DeFi) platforms has been slow. There is limited knowledge of the different DeFi services among the general public – and indeed among the regulators.

There are no regulatory positions on DeFi, given that the vast majority of activities in this sector involve lending. In Mexico, lending is not an activity which is reserved for financial institutions; but some transparency and anti-money laundering/counter-terrorist financing regulations may apply, depending on the model.

Furthermore, there are no specific rules or models for decentralised prediction markets or decentralised stablecoins.

Finally, there are no specific rules applicable to DeFi platforms.

Nonetheless, it is important to analyse whether:

• the transacted asset has the qualities of a ‘security' or a ‘virtual asset' as defined under the Mexican regulatory framework, as in such case the securities regime will apply; or
• the DeFi model involves activities which are reserved for financial institutions – such as the collection of resources, insurance services, the transmission of money or investment advisory services – as in such case the specific regulations applicable to such reserved activities will apply.

5 Technology

5.1 Is blockchain technology in itself regulated in your jurisdiction and what specific legal issues are associated with its use?

There are no specific regulations applicable to blockchain technology as a whole; but some regulations could apply due to the fact that the blockchain is by nature a database.

In this regard, the applicable regulation for the protection of databases and computer programs is the Copyright Federal Law.

In addition, some of the data protection provisions of the Law on the Protection of Personal Data held by Private Parties in Mexico could apply to registered information on the blockchain.

Finally, given that blockchain technology is multi-sectoral, the applicable regulations may vary depending on the use case (eg, the General Health Law for medical records on the blockchain).

5.2 What other implications could the mainstream adoption of virtual currencies have from a technological perspective?

Mexico has become a fintech hub in Latin America. According to the FinTech Map compiled by Legal Paradox, it already has the largest number of participants in the Latin American ecosystem and the Mexican blockchain market continues to evolve.

Just three years after the publication of the Fintech Law, the ecosystem has grown more than fivefold. This is a result of the introduction of a regulatory framework that affords legal certainty to market participants, striking a balance between innovation and reduction of legal and systemic risks.

In this context, a growing number of blockchain companies (more than 50) have commenced activities on the Mexican market. Today, more than 26 different cryptocurrency exchanges are operating in Mexico, including Bitso – the largest cryptocurrency exchange in Latin America, with more than 3 million users. Bitso has already expanded its operations into Argentina, Brazil and El Salvador.

The mainstream adoption of virtual currencies would result in a plethora of new blockchain-based business models developing in and expanding into Mexico. Specifically, in the decentralised finance space for lending protocols, this would:

• modify the mining space by increasing the number of mining pools in Mexico; and
• promote the evolution of cryptographic systems and blockchain-as-a-service products in different industries.

Furthermore, such mainstream adoption would promote the use of smart contracts in the legal industry, due to an increase in the use of virtual currencies as a means of payment.

Mexico is positioning itself as a safe haven for blockchain companies around the world and should generate a significant volume of income due to its privileged position as the gateway between North and South America.

6 Data security and cybersecurity

6.1 What is the applicable data protection regime in your jurisdiction and what specific implications does this have for virtual currencies?

In Mexico, there are two main laws on data protection:

• one applicable to entities in the private sector; and
• the other applicable to entities in the public sector, such as authorities and state organisations.

In general, the party that is responsible for collecting personal data must make available to the data subjects a privacy notice that complies with the applicable regulation, to ensure that the data subjects consent to the collection of their data and the specific purpose for which it will be used.

The data protection regime entitles a data subject to access, rectify, cancel or oppose the treatment of his or her data. If these rights are not upheld, significant penalties may be imposed.

Any model based on blockchain technology must comply with the general rules on privacy and data protection in Mexico.

Notwithstanding the foregoing, there may be cases in which the right of cancellation or rectification may be limited due to the immutability of the blockchain; but there are ways in which the network can be programmed to help ensure compliance with the regulatory framework for the protection of personal data in Mexico.

The implications for virtual currency transactions are as follows:

• The transactional data cannot be erased or reversed, so the cancellation and rectification rights of users will be limited; and
• The public addresses of users and the financial information of their transactions may be treated as personal data, and may thus be subject to the abovementioned regulations.

6.2 What is the applicable cybersecurity regime in your jurisdiction and what specific implications does this have for virtual currencies?

As yet there is no national regulatory framework governing cybersecurity in Mexico; but a legislative initiative aimed at the introduction of a General Cybersecurity Law has reached an advanced stage.

The initiative would provide for the creation of a permanent Cybersecurity Commission within the National Public Security Council, which – together with the Executive Secretariat of the National Public Security System – would be responsible for monitoring compliance with the actions of the National Cybersecurity Centre, a new entity that would also be created by this bill.

With regard to virtual currencies, the applicable cybersecurity regime will vary depending on the specific use case. For example, if an electronic payment funds institution operates with virtual currencies, the relevant cybersecurity regime will be the provisions applicable to electronic payment fund institutions under the Fintech Law.

By contrast, if the institution operating with virtual currencies is a bank, the relevant cybersecurity regime will be that set out in the Law on Credit Institutions.

7 Financial crime

7.1 What provisions govern money laundering and other forms of financial crime in your jurisdiction and what specific implications do these have for virtual currencies?

With regard to the anti-money laundering (AML) requirements applicable to transactions involving virtual currencies, it is important to identify who is executing such transactions:

• fintech institutions or banks; or
• other entities or natural persons.

Specific know your customer/AML rules apply to fintech institutions and banks respectively. For other entities and natural persons, the general rules of the Federal Law for the Prevention and Identification of Operations with Resources of Illegal Proceeds may apply.

The obligations to which fintech institutions and banks are subject are strict and include requirements such as:

• the development of an AML prevention manual;
• the establishment of internal functions in charge of the AML department – that is, the compliance officer and the communication and control committee; and
• a risk-based approach analysis of AML risks.

The obligations for other entities and natural persons are more flexible, but such entities:

• must register with the Tax Administration Service in order to upload reports to the AML system of the Financial Intelligence Unit; and
• must report transactions that exceed a pre-determined threshold of approximately $2,800 in one transaction or in accumulated transactions over a six-month period.

Given that a regulatory burden applies to cryptocurrency exchanges, the transactions executed by users must be monitored and reported where the specified threshold is exceeded. This may have an impact on the volume of transactions executed using virtual currencies.

8 Consumer protection

8.1 What consumer protection provisions apply to virtual currencies in your jurisdiction?

The consumer protection regime depends on the type of entity that is operating the virtual currency:

• fintech institutions and banks; or
• non-financial entities.

Financial institutions are subject to:

• the Law for the Protection and Defence of the User of Financial Services);
• secondary provisions issued by the National Commission for the Protection and Defence of Users of Financial Services; and
• the Law on the Transparency and Regulation of Financial Services.

For non-financial entities, the consumer protection regime for virtual currencies is the same as that which applies to other types of goods and services: the Federal Consumer Protection Law and secondary provisions.

Notwithstanding the above, if the virtual currency is considered a security under the Mexican securities framework, the applicable regime is the Securities Market Law and secondary provisions.

8.2 What other implications could the mainstream adoption of virtual currencies have from a consumer perspective?

In the event of the mainstream adoption of virtual currencies, we would anticipate an increase in complaints procedures, due to a lack of knowledge of the economic design of virtual currencies among the general public.

In this regard, from a consumer perspective, any increased use of virtual currencies by local establishments such as restaurants and cinemas should take place in a way which ensures that the volatility of virtual currencies can be controlled.

Furthermore, the transaction process should be easy to use; and safeguards should be imposed to protect Mexican citizens, who are not generally tech savvy (eg, private key recovery processes and social wallets).

Finally, the introduction of cryptocurrency exchanges and wallets for consumers will be considered by financial institutions such as banks.

9 Competition

9.1 Do virtual currencies present any specific challenges or concerns from a competition perspective?

The main challenge is that there are no specific competition rules applicable to virtual currencies in Mexico. As a result, the general competition regulations may apply.

It will also be important to determine which of the Mexican competition regulators will be responsible for regulating the virtual currencies market. Mexico has two competition authorities:

• the Federal Economic Competition Commission (COFECE), which has the power to impose remedies for fraudulent or manipulative practices in all markets except the telecommunications market; and
• the Telecommunications Federal Institute, which has the same power as COFECE, but exclusively over the telecommunications market.

The only precedent in Mexico for the regulation of the digital space was issued in 2019, specifically for digital platforms. In this context, in May 2019, a resolution was issued finding that COFECE was competent to decide on a merger between Uber and Cornershop, establishing a historical precedent that will affect the virtual currency market in the future.

However, it is important to determine whether a virtual currency has the qualities of a ‘security' under the Mexican regulatory framework, as in such case the Securities Market Law will apply and the main authority, from a competition perspective, will be the National Banking and Securities Commission.

10 Taxation

10.1 How are transactions in virtual currencies treated from a tax perspective in your jurisdiction?

The tax regime in Mexico has not been updated to consider the use of blockchain or cryptocurrencies. The standard regulations will apply; and thus a case-by-case analysis must be carried out.

An important point to consider is the digital platforms tax which was introduced in June 2020, and which applies to individuals who obtain income by providing services or selling goods through digital platforms. Under this regime, the digital platform must make the income tax and value added tax (VAT) withholdings, and will pay such withholdings directly to the Tax Administration Service in certain cases.

To calculate the withholding, specific rates apply to income derived from different activities as follows:

• Provision of services for the land transport of passengers and delivery of goods: 2.1%
• Provision of lodging services: 4%
• Disposal of goods and provision of services: 1%

For VAT purposes, the regime is simpler: the digital platform will withhold 8%, which represents 50% of the real VAT rate of 16%.

11 Trends and predictions

11.1 How would you describe the current landscape and prevailing trends in your jurisdiction as regards virtual currencies? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

The blockchain industry is evolving fast. Mexico has positioned itself as a fintech hub and we expect that the market will become a safe haven for virtual currencies as more and more users are joining crypto platforms.

For example, Mexican unicorn Bitso was set up in 2014 with 200 users and two employees. Seven years later, it has around 3 million registered users and 225 employees and other collaborators, from 25 different nationalities. It has also managed to raise just over $82 million in investments to drive its growth during this journey.

Given these trends, we expect that the financial system will become more open to innovation and we will see more authorised entities operating within the regulatory sandbox that will test the latest advancements in technology such as artificial intelligence, Internet of Things, machine learning, quantum computing and blockchain in the Mexican financial system.

There has recently been significant change at the Mexican financial regulators in terms of the people who are responsible for the main areas that oversee fintech institutions, the regulatory sandbox and the anti-money laundering requirements. We would thus expect to see differences in regulation and supervision over the next 12 months.

As yet, no specific regulatory reforms regarding virtual currencies are in the pipeline; but due to the increased use of stablecoins and the novel models emerging from the regulatory sandbox space, we expect an official statement from the regulators soon.

12 Tips and traps

12.1 What are your top tips for virtual currency providers seeking to enter your jurisdiction and what potential sticking points would you highlight?

Tips:

• Develop an automatic system to monitor transactions and generate anti-money laundering reports for the relevant authorities.
• Develop an automatic know your customer system to generate unique identification files for each user.
• Implement a good financial education programme for users, in order to reduce sanctions and complaints due to common mistakes.
• Obtain comprehensive legal advice from specialised lawyers to develop your business model.

Sticking points:

• Ensure that the activities that you will conduct do not constitute a reserved activity for financial institutions.
• Remember that operating with stablecoins constitutes a reserved activity for financial institutions.
• From a tax perspective, be aware of the tax obligations arising from your operations in Mexico and seek a specialised tax opinion in order to arrive at a good strategy in this regard.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.