THE MEXICAN CENTRAL BANK (BANCO DE MÉXICO) PUBLISHES CIRCULAR 4/2019 ADDRESSED TO CREDIT INSTITUTIONS AND FINANCIAL TECHNOLOGY INSTITUTIONS REGARDING THE GENERALPROVISIONS APPLICABLE TO CREDIT INSTITUTIONS AND FINANCIAL TECHNOLOGY INSTITUTIONS IN THE OPERATIONS THEY PERFORM WITH VIRTUAL ASSETS.
On March 8, 2019,the Federal Official Gazette (DOF) published circular 4/2019, issued by the Mexican Central Bank, which provides the following:
- To define the virtual assets, as well as to identify its characteristics, through which Credit Institutions and Financial Technology Institutions (“FTI”) may operate;
- To set the terms, conditions and restrictions of the operations that Credit Institutions and FTI’s may perform with virtual assets, or cryptocurrencies;
- To establish deadlines, terms and conditions to be observed by Credit Institutions and FTI’s, in cases where the virtual assets with which they deal are converted into other sorts of virtual assets or their characteristics are modified;
- To ascertain the information regarding virtual asset transactions that Credit Institutions and FTI’s are required to submit to the Mexican Central Bank in order to obtain its authorization to operate with virtual assets; and
- To define the characteristics of the permissions required to execute transactions with virtual assets.
As mentioned above, circular 4/2019 is addressed to Credit Institutions and FTI’s, with regards to their operations with cryptocurrencies. Pursuant to circular 4/2019, the Mexican Central Bank will seek to exploit the use of such cryptocurrency technology, on condition that they are used for internal operations of these institutions. However, they are not to be used to provide customers with exchange, transmission or custody services.
Internal operationsare defined as the activities conducted internally by Credit Institutions and FTI’s to perform their clients’ passive, active and service operations with oron their own behalf. This includes the activities undertaken by Credit Institutions and FTI’s to support their international transfers of funds.
In addition, Credit Institutions and FTI’s intending to perform operations with virtual assets must submit their authorization request before the Mexican Central Bank. This request must be accompanied, among others, by the following information:
- A description of the virtual assets trading model that the Credit Institutions and the FTI’s intend to use to conduct such trading;
- A comparative table to allow the identification of the requirements of the applicable regulation and the measures that Credit Institutions and FTI’s will establish in order to comply with said regulation;
- The benefits of conducting operations with virtual assets; and
- Operating manuals that the Credit Institutions and the FTI’s have elaborated in relation to the virtual assets’ operations for which the said institutions request the Mexican Central Banks authorization, among others.
Lawyers from the banking and financial practice of our Firm will be delighted to provide you with further information regarding the content of this informative note.
|Miguel Angel Peraltafirstname.lastname@example.org|
Mexico City, March 21st, 2019.