HackerNoon.com
Published in

HackerNoon.com

Navigating Crypto Regulation: Mexico

  1. Where is crypto traded in Mexico and is it legal?
  2. How can I buy or sell crypto for fiat?
  3. How do I issue or purchase securities in Mexico?
  4. Are there any unique crypto opportunities in Mexico?
  5. What is my tax liability?

🇲🇽 Where is crypto traded in Mexico and is it legal?

Is crypto trading legal in Mexico?

  1. Bitso — the Bitso website states “Bitso S.A.P.I. de C.V., will request the respective authorization from the National Banking and Exchange Commission (CNBV) and, if applicable, from the Bank of Mexico (Banxico) in accordance with the term established in the general provisions issued for that purpose.”
  2. Volabit — the Volabit website states “In terms of the eighth transitory article of the law to regulate financial technology institutions, the authorization to carry out operations within this platform of electronic payment funds is in process, so the current operation of the platform is not an activity supervised by the Mexican authorities.”

💵 How can I buy or sell crypto for fiat?

Can residents of the U.S. and territories trade for fiat on Mexican exchanges?

  1. AML/ KYC — In light of the new requirements under the FinTech bill, Mexican crypto exchange users may be restricted to those who maintain a Mexican bank account. But even those Americans that do maintain a Mexican bank account may still struggle…
  2. Restrictions on offerings to U.S. residents — to set up a Bitso account, prospective users must enter personal information including name, date of birth, and country of residence. If you select “United States” on their dropdown, you will receive the message “Incorrect Country — Unfortunately we cannot accept United States residents at this time”. While they do not explain why they can’t accept U.S. residents, AML/ KYC concerns are probably not the reason, considering the same message does not appear for United Nations sanctioned countries (such as North Korea/ Iran). It is more likely that the exchange is cautious about the repercussions from the SEC regarding offering the sale of securities to U.S. residents. Whether or not Volabit has the same restriction is unclear, but they do require a Mexican phone number to verify identity.

👮🏻 How do I issue or purchase security tokens in Mexico?

How is a “security” defined in Mexico?

How can I issue a security token without registering it with Mexican authorities?

  1. Securities are offered exclusively to qualified investors or institutional investors;
  2. Equity securities (providing shares or equity in the company as opposed to traditional tokens that provide a utility or investment) are sold to a maximum of 100 individuals;
  3. Securities are sold pursuant to an employee benefit plan (e.g. equity in a start-up as compensation or payment); or
  4. Securities are sold as an “option to purchase” for shareholders or members of entities whose principal purpose is to render services to those shareholders or members (e.g. a country club could allow members to buy shares of the club instead of, or in addition to, regular payments).

What defines a qualified investor in Mexico?

  • Any person holding investments in securities during the prior year on average of UDI 1.5 million; or,
  • Any person that has obtained, during the previous two years, an annual net income equal to, or exceeding, UDI 500,000.
  • Any person holding investments in securities during the prior year on average of UDI 3 million; or
  • Any person that has obtained, during the previous two years, an annual net income equal to or exceeding UDI 1 million.
  • Any entity which is deemed as such or is a financial entity (Mexican and foreign banks, broker-dealers, insurance companies, investment funds, private pension funds, among others).

How are security tokens registered in Mexico?

  1. Legal and financial information prepared in accordance with Mexican accounting principles;
  2. A credit rating from a recognized credit rating agency;
  3. A description of the transaction;
  4. A discussion of risk factors;
  5. Management discussion and analysis; and
  6. Applicable regulation, including tax treatment and corporate governance information.
  1. A green grade if the issuers reveal 80% to 100% of their information.
  2. A yellow grade if the issuers reveal 51% to 79% of their information.
  3. A red grade if the issuers provide deficient transparency to their investors
  1. Reporting: Companies must provide annual and quarterly reports including audited financial statements.
  2. Disclosure: Companies must disclose to the public any relevant event that may affect the value of the security if the event is equivalent in value to 5% of the company’s assets, or 3% of the previous year’s total sales.
  3. Restrictions: Voting restrictions in Mexican public companies are included in each specific company’s by-laws and must be analyzed on an ongoing case-by-case basis.

🔥 Are there any unique crypto opportunities in Mexico?

  1. The transactions the FinTech institution intends to carry out are expressly indicated in their company by-laws;
  2. The company has the appropriate corporate structure to transact; and
  3. The company has the requisite controls and infrastructure such as operating, accounting, security systems, officers and manuals.

💰 How do I pay tax on any gains or income?

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Dennis Zdonov

Entrepreneur, opportunist, applying game design to all walks of life