Mexico & Cryptocurrency

On December 20121 The Central Bank of Mexico (Banxico) announced its intention to launch a central bank digital currency (CBDC) by 2024, aiming to leverage new technologies for enhanced financial inclusion. This move aligns Mexico with other Latin American nations like Brazil and Peru, which are also advancing CBDC development. Banxico aims to have its CBDC implemented by the end of 2024, marking a significant step forward in the country's digital currency landscape.

According to Statista's projections In 2023, Mexico ranked among the top 20 countries globally for crypto adoption by transaction volume. Analysis of web traffic to cryptocurrency transaction websites revealed this trend. Interestingly, Mexicans showed a slight preference for decentralized services like Decentralized Finance (DeFi) over centralized ones. Moreover, the country saw a rise in P2P crypto exchanges, securing the 30th position out of 146 countries worldwide.

On may 2022 Tether expanded its stablecoin offerings with the launch of MXNT, pegged to Mexico’s peso. Supported initially on Ethereum, Tron, and Polyong blockchains, MXNT marks Tether’s debut in Latin America. With 40% of Mexican companies eyeing blockchain and crypto adoption, Mexico emerges as a promising crypto hub.

How many crypto owners in Mexico?

In Mexico, cryptocurrency ownership is on the rise, with 14% of respondents reporting ownership. Bitcoin leads as the most popular coin (6%), followed by Litecoin (2%), Bitcoin Cash (2%), and Ripple (2%). Colombia and Austria also boast a 14% cryptocurrency ownership rate.

In Mexico, similar to Brazil, the predominant age group for crypto ownership is 18 to 24 years old, comprising 22% of all crypto ownership. Meanwhile, in the U.S., ownership leans slightly older, with 25 to 40-year-olds representing 25% of crypto ownership.

How Do Mexicans View Crypto?

The recent Global Crypto Literacy Survey revealed intriguing insights, including Mexican respondents reporting higher crypto awareness compared to those in the U.S. or Brazil. Potential factors for this trend may include cultural, educational, and technological familiarity, suggesting longer-standing crypto usage in Mexico.

Mexico – Next Latin America Crypto Hub?

Mexico's burgeoning e-commerce landscape, expanding by 23% in 2022 according to the Mexican Association of Online Sales (AMVO), along with its global leadership in e-commerce and digital payments growth, presents fertile ground for crypto integration. Despite potential hurdles posed by stringent compliance standards, essential for user safeguarding and sectoral credibility, these regulations serve as a protective measure, ensuring the long-term sustainability and legitimacy of the crypto sector within the country.

Mexico's Financial Technology Companies Law, established in 2018, encompasses provisions on "virtual assets", commonly referred to as cryptocurrencies. These assets are defined as electronically registered representations of value used for various legal transactions, exclusively transferred electronically. The legislation also extends Mexico's anti-money laundering regulations to cover virtual assets, mandating financial institutions to report transactions exceeding certain thresholds.

Key points regarding Mexico's regulatory approach to virtual assets include:

• Authority of Mexico's Central Bank: The law grants extensive powers to Mexico's Central Bank to regulate virtual assets. This includes specifying permissible virtual assets for financial companies to operate with, defining their unique characteristics, and setting conditions and restrictions for transactions involving such assets.
• Issuance of Pertinent Regulations: Within one year of the law's enactment, Mexico's Central Bank must issue regulations pertaining to virtual assets. These regulations will provide detailed guidelines for financial institutions and other stakeholders operating in the virtual asset space.
• Disclosure of Risks: Financial companies engaged in transactions involving virtual assets are required to disclose relevant risks to their clients. These disclosures must be made in a clear and accessible manner through various channels, such as their websites or other communication channels used to provide services. The disclosed risks typically include:
  • Clarification that virtual assets are not legal tender and are not backed by the federal government or Mexico's Central Bank.
  • Notification that transactions involving virtual assets may be irreversible once executed.
  • Warning about the volatile nature of the value of virtual assets.
  • Acknowledgment of inherent technological, cybernetic, and fraud risks associated with virtual assets.

By adhering to these regulations and disclosure requirements, financial institutions can ensure transparency and mitigate risks associated with transactions involving virtual assets within the Mexican regulatory framework.

Insights on Cryptocurrency Legal Issues

In many jurisdictions, the legal framework surrounding cryptocurrencies, including crypto mining, remains ambiguous. While some countries like Israel treat crypto mining as a taxable business activity, others, such as India, grapple with regulatory uncertainty. Despite this, few nations explicitly prohibit crypto mining. Explore our Freeman Law Cryptocurrency Law Resource page for comprehensive insights into the legal landscape of cryptocurrency across various countries.

Legal Status Overview

In Mexico, Bitcoin is deemed legitimate and accepted as a method of payment and value transmission, although it's not considered legal tender. For instance, one can purchase a car for up to 3,210 times the minimum wage, approximately MXN $225,000 or USD $13,400, using Bitcoin.

Taxation

Mexico does not have an active tax law specifically for cryptocurrencies. The FinTech Law states that crypto is not illegal but also not legal tender, allowing it to be taxed as movable property. Crypto transactions are subject to tax on the net profit from sales or exchanges, ranging from 1.92% to 35%. Capital gains and income are taxed similarly, with gains under MEX$90,000 exempt from taxes, potentially covering a significant number of crypto transactions.

In Mexico, buying crypto offers diverse options, including traditional exchanges, peer-to-peer platforms, and Bitcoin ATMs. Notably, Oxxo and 7-Eleven stores facilitate cash purchases at numerous physical locations, bypassing the need for a bank account. Users exchange physical cash for a receipt containing cryptocurrency access, redeemable within three days. Bitso and Paxful integrate with these platforms, ensuring swift transactions with a nominal fee of 2.6%. Moreover, global exchanges in Mexico enhance accessibility, providing lower fees and heightened liquidity. Bitcoin ATMs, particularly prevalent in tourist areas, offer another avenue for purchasing crypto. These varied options cater to the diverse needs and preferences of crypto enthusiasts across the country, fostering widespread adoption and accessibility.

Is Bitcoin legal in Mexico?

Yes, Bitcoin is legal in Mexico. However, there are regulations in place regarding its use, including requirements for businesses to disclose risks associated with cryptocurrencies to customers.

Does Mexico tax crypto?

Yes, Mexico taxes cryptocurrency transactions. Capital gains from selling or exchanging cryptocurrencies are subject to taxation, with rates ranging from 1.92% to 35%. However, capital gains under a certain threshold, such as those below 90,000 Mexican pesos, may be exempt from taxes.

Which crypto app does Mexico use?

In Mexico, various cryptocurrency apps are used, including Bitso, Volabit, Binance, and CoinBase. These platforms offer services for buying, selling, and trading cryptocurrencies, catering to the diverse needs of Mexican users.

Can you Buy Bitcoin Without ID in Mexico?

Yes, you can buy Bitcoin anonymously in Mexico, but it often involves higher fees and less convenience. Using centralized exchanges is convenient but requires ID. Opting for P2P platforms like LocalBitcoins or Paxful offers anonymity but may have some limitations.