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Last week, the Central Bank of Mexico (Banxico) began a public consultation surrounding the rules that digital equity companies must follow. Banxico will discuss a draft of regulatory provisions for the operation of electronic payment fund institutions, which include the use of cryptocurrency – known as ‘digital assets’ in the project – as one of the means of payment.
The draft provisions submitted for consultation, accessible from the Public Consultations page of Banxico, lists the requirements that payment fund institutions must observe for the opening of accounts, the payment of resources and the issuance of electronic payment funds. It is on this last point that the provisions must lay down the conditions in the case of funds in foreign currencies or digital assets.
The web page of Banxico reads (translation):
“[The provisions shall] Establish the terms and conditions with respect to the issuance of electronic payment funds relating to foreign currency or digital assets and, in general, the conduct of foreign exchange transactions, as well as the provision of the money transmission service referred to in said Act [the Fintech Act], in foreign currency.”
One of the provisions refers specifically to operations in foreign currency and cryptocurrency, stating that the payment fund for institutions concerned must obtain authorization from Banxico for this purpose. They must also provide information, such as a description of the operations, identification of the target population and the fees to be charged, among other requirements.
“Likewise, subject to the prior authorization of the Bank of Mexico, the aforementioned institutions may open Electronic Payment Fund Accounts referring to Foreign Currency, as well as, where applicable, to Digital Assets, only in the name of national individuals and legal entities or foreign individuals resident in Mexico and who can prove their migratory status by means of the corresponding document,” according to the Banxico website (translation).
The project also includes the obligation for electronic payment fund institutions to classify accounts into three levels according to the amounts handled. They want to use the public ledger function of the blockchain as a means for detecting and preventing money laundering. Level 1 electronic payment fund accounts allow a maximum of 700 tax units, or about 4,200 pesos ($220), to be issued or received. Level 2 accounts, the monthly maximum is about $950, while Level 3 accounts, this monthly cap is the equivalent of $3,200.
Banixo’s public consultation is open for comments until 29 August. The consultation was approved last March under the Law to Regulate Financial Technology Institutions (FinTech Law), which, in addition to electronic payment fund institutions, also regulates crowdfunding companies and digital assets.