In March 2018, Mexico enacted a law that provides broad rules applicable to virtual assets (i.e., cryptocurrencies). These assets, which are not legal currency, are defined as representations of value electronically registered, utilized, and transferred by the public as a means of payment. Mexico’s central bank has been granted broad powers on virtual assets, to be exercised through the issuance of pertinent regulations to be published within a year from the enactment of the law. Furthermore, services involving virtual assets is an activity classified as vulnerable to money laundering. As such, relevant transactions that reach or exceed a certain amount must be reported to the Mexican government starting in September 2019.
I. Law on Virtual Assets
Mexico’s Law to Regulate Financial Technology Companies, enacted in March 2018, includes a chapter on operations with “virtual assets,” commonly known as cryptocurrencies. This chapter defines virtual assets as representations of value electronically registered and utilized by the public as a means of payment for all types of legal transactions, which may only be transferred electronically. It also provides that Mexico’s legal currency may not, under any circumstance, be considered a virtual asset.
Mexico’s central bank, Banco de México, is granted broad powers under the Law to regulate virtual assets, including
- specifying those virtual assets that financial companies are allowed to operate with in the country, defining their particular characteristics, and establishing the conditions and restrictions applicable to transactions with such assets;
- authorizing financial companies to perform transactions with virtual assets; and
- imposing fines due to unauthorized transactions using virtual assets.
Pertinent regulations applicable to these assets must be issued by Mexico’s central bank within a year from the enactment of the law.
Financial companies that carry out transactions with virtual assets must disclose to their clients the risks applicable to these assets. At a minimum, these companies must inform their clients, in a clear and accessible manner on their respective websites or through the means that they utilize to provide services, that
- a virtual asset is not a legal currency and is not backed by the federal government nor by Mexico’s Central Bank;
- once executed, transactions with virtual assets may be irreversible;
- the value of virtual assets is volatile; and
- technological, cybernetic, and fraud risks are inherent in virtual assets.
II. Law on Anti-Money Laundering Pertaining to Virtual Assets
Providing services involving virtual assets is an activity classified as vulnerable to money laundering. Thus, providers of such services must report relevant transactions that reach or exceed a particular amount (equivalent to approximately US$2,780 as of April 2018) to the Mexican government starting in September 2019. Furthermore, providers of such services will have a number of additional duties, including
- identifying their clients and verifying their identity through official identification documents, a copy of which must be kept by the provider;
- asking the client for information on his/her occupation if a business relationship is established; and
- keeping records pertaining to transactions and clients.
Regulations further detailing pertinent requirements for financial companies are to be published by August 2018.
Tax experts opined that, as of March 2018, Mexican law did not appear to provide for clear statutory rules on taxation pertaining to virtual assets. These experts also indicated that pertinent regulations on virtual assets must be enacted in order to determine the specific tax rules applicable to such assets.
Prepared by Gustavo Guerra
Foreign Law Specialist
 Ley para Regular las Instituciones de Tecnología Financiera [Law to Regulate Financial Technology Companies] arts. 30–34, Diario Oficial de la Federación [D.O.F], Mar. 9, 2018, available as originally enacted on the website of Mexico’s House of Representatives at http://www.diputados.gob.mx/LeyesBiblio/pdf/LRITF_ 090318.pdf, archived at https://perma.cc/SB6N-RQY7.
 Id. art. 30.
 Id. arts. 30–32, 88, 104(I).
 Id. DISPOSICION TRANSITORIA SEXTA (II).
 Id. art. 34.
 Ley Federal para la Prevención e Identificación de Operaciones con Recursos de Procedencia Ilícita [Federal Law for the Prevention and Identification of Transactions with Resources of Illicit Origin] art. 17(XVI), Nota de vigencia, D.O.F., Oct. 17, 2012, available as amended through March 2018 on the website of Mexico’s House of Representatives at http://www.diputados.gob.mx/LeyesBiblio/pdf/LFPIORPI_090318.pdf, archived at https://perma.cc/4UVN-GM98.
 Id. arts. 17, 18.
 Ley para Regular las Instituciones de Tecnología Financiera art. 58, DISPOSICION TRANSITORIA SEGUNDA.
 Dainzú Patiño, Se abre camino para cobrar impuestos a bitcoins, Expansion.mx (Mar.14, 2018), https://expansion.mx/economia/2018/03/14/se-abre-camino-para-cobrar-impuestos-a-bitcoins, archived at https://perma.cc/K9NF-ALYK.
Last Updated: 12/30/2020