Mexico to Experiment with Blockchain and Cryptocurrency to Cut Banking Costs

The Mexican central bank, Banco de México, has reportedly agreed to harness blockchain technology and experiment with cryptocurrencies as part of its broader plans to push down financial transaction costs.

Officials from the banking regulator made the announcement at a public consultancy recently, according to Bitcoin Exchange Guide.

To begin with, the regulator will figure out how to include virtual currencies in its payment processing system.

The report comes almost a year after the regulator refused to give legal status to cryptocurrency, saying that it is vulnerable to hackers and benefits black marketers by protecting their anonymity — precisely the reason banking regulators around the world are keeping cryptocurrency operators at the bay.

Under Mexico’s new financial technology law, approved by Congress earlier this year, cryptocurrency operators should register with the regulator as a fintech company and keep their transactions transparent and audited.

There are already established cryptocurrency exchanges in Mexico — Bitso and Volabit to name a few. Reports say some Mexicans are already buying Bitcoins despite having no bank account.

Police in the US have recently arrested a bitcoin dealer from Mexico, charging him with money laundering and other financial crimes. He reportedly sold around US$750,000 worth of the cryptocurrency to hundreds of buyers throughout the United States.

Meanwhile, American blockchain startup Ripple has partnered with Cuallix, a North American financial institution with extensive operations in Mexico, saying it will make remittances from the United States to Mexico cheaper and easier.

Remittance is a huge market that blockchain startups like Ripple want to tap into. Mexicans living in the United States alone send home around US$25 billion in a year. Ripple says it can reduce the cost of cross-border transactions by 60%.