Cryptocurrency Regulations in Mexico

Mexico’s approach to cryptocurrency is cautious, although evolving. The nation is not fully restrictive but has purposefully aimed to do away with the role of crypto in its official financial circle. While Bitcoin is not regarded as legal tender, and thus financial institutions cannot handle it without explicit approval, which has not yet been given, failure to heed the request could lead to the suspension of the account.

As a business, investor, or enthusiastic crypto lover, it is important to understand crypto regulations in Mexico so you can operate legally. As crypto adoption and platforms are gaining ground, especially among youth and fintech platforms, it is important to know the legal boundaries of running crypto ventures.

Several regulatory bodies such as the Bank of Mexico (Banxico), the Ministry of Finance and Public Credit (SHCP) and the National Banking and Securities Commission (CNBV) are in oversight of Mexico’s crypto landscape. In this way, these agencies work together to detect innovation while enabling assurance of financial system stability and compliance with global standards.

Historical Context

Legal support for Mexico’s crypto journey officially started in 2018 when the FinTech Law was enacted — becoming one of the first comprehensive, and at the time, Latin America’s most expansive framework for financial innovation. Before that, crypto and businesses fit into a thin gray area where guides or rules didn’t exist.

Key regulatory milestones include:

The passing into law of the FinTech Law classifying virtual assets and subjecting crypto service providers to some AML rules in 2018.

Banxico released Circular 4/2019 that limited the involvement of financial institutions in virtual asset operations.

In 2021 Banxico, SHCP, and CNBV issued a joint statement stating that cryptocurrencies are not legal tender and are illegal in Mexico’s financial system.

These steps represent a clear step forward in achieving Mexico’s desire to integrate innovation and financial stability while protecting the consumer.

Regulatory Framework

Role of Key Regulatory Authorities

• Regulates virtual assets, determines which of those can be used by financial institutions, and supervises monetary policy.
• Coordinates financial system policy and is very close to tax and customs authorities.
• Supervises securities and financial institutions to guarantee legal compliance within CNBV.
• Monitors AML and tax compliance of crypto-related businesses (SAT – Tax Administration Service).

Licensing and Registration Requirements

Businesses involved in crypto that are labeled as Virtual Asset Service Providers (VASPs) are required to register with SAT and to follow AML regulations. Services to Mexican users must be offered by foreign companies also registering. Virtual assets are technically allowed to be used by financial institutions only with Banxico’s authorization but no such approvals have been made to date.

AML & KYC Requirements

All crypto exchanges must act in accordance with the Federal Law for the Prevention and Identification of Operations with Illicit Proceeds.

• Conduct customer due diligence (KYC).
• Report suspicious transactions.
• An amount of approx. $2,849 USD and more must be declared to the authorities.

These efforts seek to bring Mexico in line with FATF Recommendation 15 pertaining to crypto regulation.

Taxation of Cryptocurrency

According to Mexico’s FinTech Law, cryptocurrency is treated as movable property. Capital gain tax is triggered by buying or selling crypto, in which case it falls between 1.92% and 35%, depending on the amount and individual income level. There is no dedicated crypto tax regime at the moment, which adds some fuzziness when it comes to reporting obligations.

Regulation of ICOs and STOs

ICOs or STOs have no explicit regulation. However, if it may be considered a security under Mexican law, it could be subject to the approval of CNBV and local securities regulations.

Mexico Crypto Policies

Regulatory Approach to Cryptocurrency Usage

As with most countries in the world, cryptocurrencies are not legal tender in Mexico and cannot be used within the formal financial system. A 2021 joint announcement by Banxico, SHCP and CNBV reaffirmed this. While individuals and non‐financial businesses legally can use and trade crypto for private transactions, the latter are regulated.

Crypto Mining

Specifically, there is no crypto mining regulation in place in Mexico. Mining is not prohibited directly, and thus is allowed under the principle that anything unregulated is permitted. Nevertheless, application of energy consumption laws is likely, in particular for large scale operations.

Government-Backed Initiatives

There has been active blockchain adoption in Mexico:

The project to develop a Central Bank Digital Currency (CBDC), which is set to launch in 2025, is being undertaken by Banxico in order to promote financial inclusion and digital payments.

Blockchain based projects such as Blockchain HACKMX, and GrainChain use Blockchain to help the government become more transparent and enhance the agricultural supply chain.

Penalties for Non-Compliance

For instance, non compliance with AML or tax obligations may result in:

• Monetary fines.
• Asset seizures.
• In extreme cases (such as money laundering or tax fraud), criminal charges.

Mexico Approach to Crypto Innovation

Mexico’s FinTech Law places a regulatory sandbox in which fintech and crypto startups may test innovations for as much as two years in a controlled setting. While few approvals have been given, they are a sign of Chinese openness to future innovation.

Crypto is being adopted: crypto platforms like Bitso have been used quite a lot, there are 8 million users in total, and it’s in the 16th spot in crypto adoption worldwide. Backbone Systems and Pixelette Technologies, blockchain firms, are developing their domestic blockchain infrastructure.

This interest in blockchain integration at a regional level is also shown by the government’s collaboration with projects such as LACChain.

Notable Challenges and Issues

Inconsistencies in Regulation

On the contrary to some countries with regional disparities, Mexico has a national regulatory framework, which implies that all states adhere to the same policies.

Challenges to Enforcement

Being pseudonymous, crypto as well as the emergence of DeFi makes it difficult for authorities to track transactions or justify real-time compliance.

Public Perception

The public is cautiously optimistic. Although crypto is becoming popular with the younger demographics (as seen with 14% ownership in 2024), older demographics, along with mainstream media, are wary, regarding crypto as a platform for scams or illegal activities.

Conclusion

Cryptocurrency has a measured, evolving regulatory environment over which Mexico offers. However, from an AML and tax perspective, crypto lies outside the formal financial system; nevertheless, individuals and nonfinancial entities can perform crypto activities.

Staying informed and compliant is valued by investors, startups and crypto enthusiasts. Because of what’s coming—namely, the CBDC launch—Mexico remains a country to watch when it comes to the crypto world.

Frequently Asked Questions (FAQs) 

1. Is Bitcoin legal in Mexico?

 Yes. Bitcoin is legally permissible to adopt, however, it is not treated as legal tender.

2. Can Mexican banks provide crypto services?

No, there are no activities related to crypto the banks and financial institutions engage in without Banxico’s approval, which has so far not been granted.

3. Are crypto exchanges required to register?

Yes. The SAT requires exchanges and other VASPs to register and fulfill AML/KYC requirements.

4. How are cryptocurrencies taxed in Mexico?

 The crypto profits are taxed as capital gain where tax rates vary from 1.92% up to 35%.

5. Is crypto mining legal in Mexico?

 Yes. Despite no specific laws preventing mining, general energy and business laws apply.

6. Does Mexico have a CBDC?

 Not yet. A CBDC which Banxico is developing will be launched in 2025.

7. Is it legal to invest in ICOS and STOs in Mexico?

However, there is no dedicated framework, and tokens deemed as securities have to adhere to CNBV’s securities laws.

8. What will be the consequences for noncompliance?

If the offense is worth that, the penalties include not only fines and confiscation of assets but even criminal charges.

9. Is it possible to purchase goods with crypto in Mexico?

 In private transactions, yes, when the merchant does accept crypto. It is not legal tender.

10. Are decentralized finance (DeFi) platforms subjected to regulation?

Not directly. Currently, DeFi is not at all regulated, however, the authorities are keeping a watchful eye on its effect.