Countries all around the world are coming up with new regulations about cryptocurrencies almost every day. While most of them try to find the balance between consumer protection and the development of crypto industry, Mexico introduced a regulation that could potentially damage not only the crypto industry but the economy as a whole.

On March 10 the Bank of Mexico published a circular with the new details on cryptocurrency regulations in the Official Gazette of the Federation. The industry insiders have made their comments about the changes and rated them as disastrous for the whole country.

Comments flood in

CEO of Isbit, a Mexican cryptocurrency exchange, Sebastian Acosta Checo commented that Mexico has a lot to gain from the industrial application of digital assets to facilitate tourism, trade and financial inclusion. As the country is the biggest remittance corridor in the world (Mexico has the second largest population of migrants) and at the same time the 6th most visited country. Therefore, the impact of the new regulations will not only impact the crypto industry but will go beyond it and damage the economy as a whole.

The CEO of another Mexican cryptocurrency exchange - Volabit, Thomas Alvarez also stated that the new regulations show that the government does not understand some of the fundamental features of cryptocurrencies.

With the new regulations, the law requires companies to become a regulated financial institution, without that, the firm will be considered to be operating illegally. However, if the company obtains the needed license it will still not have the authorization to list any cryptocurrencies. These two laws together make it legally impossible to operate a cryptocurrency exchange in the country.

A massive contradiction

As Checo added, in a way this law will prevent institutions from offering any virtual assets to customers. He also pointed out that the law seems to be made in a rush and the people within Banxico have shown ignorance about the subject they are trying to regulate.

While the industry insiders do not agree with the new regulations they still need to register if they want to continue operating. Technically newly imposed laws are in effect after publication, however, they apply only to the regulated fintech companies, which do not exist yet since the process of becoming a regulated company has not been determined by CNBV yet. However, as the publication states, the bank is expecting approximately 73 companies to register.

A misunderstanding or just ignorance?

The new regulations published by the Bank of Mexico is truly confusing and contradictory. However, it is not surprising as the cryptocurrency industry is relatively new. As mentioned above the countries with leading economies are trying to contribute to crypto and Blockchain development.

However, according to technicalanalysisofstocks.in the major hit that some of these companies may take to their share prices will indeed discourage them to continue supporting Blockchain. Being associated with a “disregarded” trading asset tends to scare investors.

The SEC in the United States requested crypto industry participants to provide data in order to understand the matter more. The United Kingdom has made surveys to determine the knowledge and the attitude of the residents of the cryptocurrency industry. Japan and Australia have made some big steps to develop new innovations. As crypto is a whole new topic for the governments and financial institutions it is key to understand the matter completely before bringing the new regulations that can potentially damage the economy. While it is important to have a regulatory framework, it must be based on the analysis of how it can affect cryptocurrencies and other industries.