Bitcoin is not banned in Mexico. Users can still use Bitcoin to buy things online, or in person at brick and mortar shops or restaurants. News of Bitcoin bans always comes across the wire every now and then. More often then not, the bans turn out to be fake or over exaggerated to an extreme. The most recent incidence of this happened in Mexico. The Mexican version of the American Internal Revenue Services, known as the SAT, recently ruled that Bitcoin would be subject to the same “money laundering vulnerable” regulations that they currently enforce for cash transactions. Mexicans aren’t allowed to use cash to pay for many types of transactions if the payment amount is over a certain limit. Controlled types of items include payments for real estate, cars, jewelry, art, or even lotto tickets. It is now technically not OK to use Bitcoin straight up for a purchase of land in Mexico.
There Is No Mexican Bitcoin Ban
However, it should come to light rather soon that Bitcoin can actually be used for such transactions. All the Mexican government really wants is a paper trail. In fact, even a straight up Bitcoin for land transaction would still have a paper trail in the form of the Bitcoin blockchain. Don’t expect the SAT to catch onto that for another few years, though. I predict that people will be able to use Latin American exchanges such as MeXBT to circumvent the SAT’s new equivocation of Bitcoin and cash. In and of itself, the fact that the Mexican government is treating Bitcoin like cash might be indicative of a few things.
The illegal dark net marketplaces that use Bitcoin undoubtedly have some times to the Mexican cartel, if speculative government and media sources are to be believed. The intertwining of technology and crime isn’t as seamless as everyone would lead you to believe and fear. This kind of uninformed decision making regarding Bitcoin regulation is what leads to misleading headlines in mainstream media, as we saw with this supposed Mexican Bitcoin Ban.
Does This Hurt Bitcoin Remittances?
Most importantly in this SAT ruling is the fact that one of the large cash transaction bans is on foreign currency exchange. Depending on the rulings of other parts of the Mexican government, we could find ourselves in a legal grey area regarding Bitcoin remittances. Mexicans are limited to $1,500 per month in foreign currency exchange. Since USD, Mexican Pesos, and bitcoins are all core components of the US-Mexican Bitcoin remittance channel, this ruling could put some more legal hurdles in front of the many legitimate Bitcoin companies that are rising up to serve this industry. What I do know is that those that have figured out how to use Bitcoin to send money overseas will not stop doing it just because of some obscure ruling from a relevant regulatory agency. Around the world, much of the remittances are already handled under the table and in unregulated areas. Bitcoin will thrive in these areas and bring security and new practices that will make the world a more equal place. This extension of the Mexican Cash ban to Bitcoin might harm the Bitcoin industry on the face; however, the added legitimacy from the ruling will also help the local industry.
How Would You Even Ban Bitcoin Anyways?
This is always an interesting thought experiment to go through. It’s also fun to imagine whether or not the SAT (or even the IRS) thought about this as well. Banning Bitcoin would be as hard as banning BitTorrent (something that hasn’t really happened). There are legitimate uses of Bitcoin, something that SAT is aware of, and for that reason it can’t be publicly squashed anymore. When Russia was considering a ban on cryptocurrency transactions, it was rumored that fines would be used to enforce the ban. With Mexico, breaking the SAT’s rules on cash and bitcoin could land you in jail for a minimum of five years. Fines, whether money or time in jail, are the stick in the carrot vs. stick paradigm. The governments around the world must be getting more aware of the fact that Bitcoin cannot be taken down from a technological perspective. They can’t send an inquiry or cease and desist letter to the Bitcoin Foundation. Funny enough, that’s actually happened before.
It’s possible that Bitcoin bans are now a thing of the past. That the worst thing that a government could do to Bitcoin is to treat it like cash. With the way that the world’s governments are trying to get rid of cash, this is still pretty bad but on an admittedly longer time line. Cash transactions are anonymous whereas Bitcoin blockchain transactions are only psuedonymous. The difference is slight and the Bitcoin regulations are still not differentiating… but at least it isn’t a full ban.
What do you think about the Mexican Bitcoin Ban that was not? Tell Bitcorati with a comment below!
Featured image from Pixabay.