According to the president of the Mexican central bank, Bitcoin is not developed money; in reality, it is not a form of money at all. He went on to say that Bitcoin is nothing more than a lousy store of value and a risky bet, and that Mexico would never accept it as legal currency.
The Bank of Mexico’s governor, Alejandro Diaz de Leon, dismissed Bitcoin’s importance in the financial sector, comparing it to barter system. “Whoever gets bitcoin in return for goods or services, we think that (transaction) is more similar to bartering since that individual is trading a commodity for a commodity, but not necessarily cash for a commodity,” he said.
This anti-Bitcoin stance of Banxico, as the central bank is colloquially called, is not the first time. In June, the bank quickly released a joint statement with the Ministry of Finance warning Mexicans that “digital currencies do not represent legal currency in Mexico, nor are they currencies within the present legislative structure.”
This came a week after Mexico’s wealthiest individuals, Ricardo Salinas Pliego, said that the bank founded by him, Banco Azteca, was trying to take cryptocurrencies. And, according to Reuters, the governor of Banxico hasn’t altered his opinion regarding Bitcoin, even after it turned out to be legal currency in El Salvador.
“In our day and age, money has developed into fiat money produced by central banks. Bitcoin is more akin to a precious metal aspect than everyday official currency.”
Governor Diaz de Leon, like so many other lenders, questioned Bitcoin’s monetary characteristics. According to him, for any asset to be called a cash, it must be a trustworthy payment mechanism, which Bitcoin isn’t really. Furthermore, Bitcoin seems to be unable to maintain its value and is subject to extreme fluctuation.
“People will not wish their buying power or income to fluctuate by 10% in a matter of 24 hours. You don’t like that kind of instability in your buying power. In that respect, it is not a great value protection.” Despite the governor’s and Minister of Finance’s negative views, Mexico has been rapidly embracing cryptocurrencies. While most people across the world see Bitcoin as a speculative investment, Mexicans see cryptocurrencies as a means to avoid the time-consuming and sometimes costly digital payment channels.
Starting in 2019, the government has made it a priority to combat money laundering by implementing strict capital movement rules. Ordinary people have been affected the most, as basic transactions now require a plethora of procedures.
Bitso, the country’s main exchange, has witnessed a significant increase in both new users and trade activity. Bitso has more than double the amount of participants as 35 top conventional brokerages at the end of last year.
