Apparently spooked by bitcoin’s recent growth and popularity, Mexico’s central bank and finance industry warned consumers that initial coin offerings violate the law and claimed cryptocurrencies were risky investments, according to Reuters.
CNBV, the country’s securities regulator, joined other government authorities in stating that Mexico does not recognize cryptocurrencies as a legal form of payment. The statement further noted there have been no ICOs to originate in Mexico.
Government Wary Of Fraud
Some ICOs, depending on certain characteristics, that originate in Mexico could violate the Markets and Securities Law, thereby constituting a financial crime, the statement said.
Only seasoned investors should experiment with cryptocurrencies, authorities said, adding that they should be on the lookout for signs of fraud.
Cryptocurrencies have demonstrated high volatility and are subject to extensive speculation, the statement said.
This week, bitcoin reached record highs, causing outages at trading services and creating questions about the reliability of the cryptocurrency platforms.
Heavy trading activity caused Coinbase to go down on Tuesday while Bitfinex had to deactivate its website due to “junk” online requests.
The government previously ruled not to make bitcoin legal tender since it is not regulated by a central bank.
Lawmakers Seek Regulation
Mexico’s legislature recently proposed a bill to regulate companies that interact with bitcoin and other cryptocurrencies, along with the wider financial technology sector.
According to El Economista, the legislature will not regulate bitcoin and cryptocurrencies themselves. The bill will focus on firms that operate within the digital currency ecosystem.
The bill does not include specific details about the bitcoin regulations, giving the central bank broad authority to regulate companies operating within this space. However, it claims that the regulations will drive innovation and competition by establishing a clear operational framework.
The bill targets money launderers and terrorist organizations that allegedly use cryptocurrency to circumvent the law. Mexico’s approach is much more conciliatory than that of China, which issued a blanket ban on ICOs and has begun to shutter bitcoin exchanges.