Mexico’s central bank plays it safe by issuing new rules for crypto exchanges

The Bank of Mexico has recommended banks refrain from opening accounts for crypto exchanges in a move aimed at safeguarding people's savings following cyber attacks

The Bank of Mexico has issued a series of new rules that directly affect crypto exchanges and people who use these platforms to trade cryptocurrency.

The central bank published a two-page document asking financial institutions and businesses that use the Mexican Interbank Electronic Payments System (SPEI) to refrain from opening bank accounts for crypto exchanges. They also asked SPEI participants to delay by one working day all crypto-related transactions.

Response to attack?

The new regulations come on the heels of a cyber attack that the Bank of Mexico says will take up to six months to resolve. The attack hit at least six banks, although no details on its extent have been revealed.

A few weeks ago, Bitso, one of Mexico’s largest crypto exchange with 500,000 users, was also hacked, but no resources or assets were stolen.

SPEI and SWIFT

The SPEI is similar to SWIFT, an international payments systems that connects about 11,000 financial institutions in 200 countries. The SPEI operates solely in Mexico and connects around 100 banks, financial institutions and exchanges.

“The purpose of the new rules is to ensure the proper operation of the Interbanking Electronic Payments System (SPEI),” the central bank said.

“Also, to strengthen the policies and security controls in the transfer of funds through the system.”

No bank accounts

Liliana Flores, a Bank of Mexico analyst, told Coin Rivet that in essence the Bank of Mexico is recommending banks using SPEI refrain from allowing crypto exchanges to open accounts with them.

READ MORE: Mexico sees first walk-in cryptocurrency bank in the world

“The main objective is to reduce the risks of the payments systems to be hacked and to protect customers’ assets being transferred through SPEI,” Flores adds.

The state bank explains that the extension by one working day before a transaction is approved is also aimed to “improve the response mechanism in the face of the possibility of risks”. The central bank also asks for full identification of operations “particularly those related to transfers of funds to companies that allow resources to be moved out of the financial sector into cryptocurrencies”.

READ MORE: Mexico the FinTech capital of Latin America

The fresh regulations also call on crypto businesses to follow protocols in the event of potential cyber attacks against the SPEI infrastructure.

“They (banks and other financial institutions) must have in place protocols and procedures that document the measures and actions to be carried out in the event risks against the SPEI infrastructure materialise,” the bank says.

Background checks

Banks are also now required to ensure background checks on all their staff as well as security checks on all their tech service providers. Moreover, they must comply with rules that require them to formally appoint a security officer, who is to be responsible for designing, implementing and verifying risk prevention policies as well as the implementation of corrective measures in case their SPEI system is under any risk.

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The crypto exchanges in Mexico will also be required to fully identify all crypto-related accounts in case the need arises to investigate further the provenance of funds being transferred into cryptocurrencies.

The Bank of Mexico will be in charge of approving all crypto-related transfers of monies before the banks can move forward with these types of transactions.

Reactions

Various crypto exchange executives have reacted to the new rules, saying the new requirements will make crypto trading that much more difficult.

Volavit General Director Tomas Alvarez suggested the new rules come as a surprise to crytpo exchanges such as his.

He said: “The impact may not be that huge, but people wanting to deal with Bitcoin, for example, will have to wait longer to do so.”

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