Tuesday, April 4, 2017

Mexico working on legislation to legitimize Bitcoin as a digital asset and open it up for pension funds

Last week we showed how two Eastern governments were planning to deal with the question of Bitcoin, with one banning it outright and the other looking to integrate it into their monetary system.  Now on March 23 we have a third sovereign government debating the merits of Bitcoin, only in this case the discussion is on how to define the crypto-currency, and then facilitate its use in their financial system that could include acting as an asset holding for pension funds.

The first draft of this financial technology law was presented by the Secretary of Credit and Public Finance of Mexico, Jose Antonio Meade, in the 80th Mexican Banking Association Convention, held in Acapulco on March 23. In accordance with this law, the central bank will define the regulation that applies to digital assets such as Bitcoin. 
This new regulation is part of the National Policy for Financial Inclusion presented by the President of Mexico on June 21, 2016. One of the axes of the policy focuses on the utilization of technological innovations to provide financial services. The government is recognizing how the technological advances have transformed the manner in which people in several industries operate, including the financial sector. It is an official priority of the state to foster the application of technological innovations to reduce the cost of financial services and widen its use among the population. 
BC: What does the bill say about Bitcoin? 
SC: The central bank will define what a ‘digital asset’ is by following basically two criteria. The first criteria is the widespread adoption by the public (high market cap) and the second is the protocols, rules, and mechanisms that allow generation, identification, division and control the replication of such units of account. 
Basically, we are talking about a currency that uses a consensus mechanism and blockchain approved by the Bank of Mexico. 
Persons (including miners) with digital assets, who do not perform operations on behalf of others, are not required to obtain authorization from regulators and can use digital assets in their daily commerce. 
The most important criteria [for a digital asset] will be that the underlying technology is sound and there is widespread adoption by the public or industry. 
The government’s goals are to transit to a digital economy, reduce or eliminate the use of physical cash, make the taxation process more efficient and transparent, create a mechanism to automate regulation/auditing and supervision tasks, expand the coverage of high quality and affordable financial services and more. - Bitcoin News

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