The Chairman of the Mexican financial regulator has identified and named 12 crypto exchanges locally carrying out business without authorizations and suggested that the operations of these exchanges are therefore illegal. The authority is in the meantime collecting evidence on which basis the relevant government functionaries will be assigned the task of taking necessary and proper action against illegally functioning crypto exchanges.

Unidade de Inteligencia Financiera or the Financial Intelligence Unit (UIF-Mexico) is the Mexican regulator of financials. However, since the crypto market is also very much present and active within Mexico, therefore, the authority also looks at the crypto industry. There are at least 23 crypto derivatives that are currently submitting their customers’ data to the authority under the crypto guidelines.

UIF-Mexico’s Chairman, Santiago Nieto Castillo, has recently recorded his discomfort against several crypto exchanges. He said that the crypto guidelines issued by UIF-Mexico haven’t been followed in letter and spirit by several crypto exchanges. He then identified that there were at least 12 exchanges that have been found violating the guidelines.

The Chairman UIF-Mexico alleged without mentioning any name that the exchanges have been functioning without registrations. Under the crypto guidelines, each crypto derivate is responsible to obtain registration from the authority known as SAT. However, he noticed that out of 23 exchanges only 11 have been registered. While the rest of the exchanges have not sought registrations from SAT. He advised that in the absence of required registrations, the services rendered by these firms shall be treated as “illegal”. In addition, any business being carried out by these non-registered firms shall be subject to strict scrutiny and action.

UIF-Mexico’s Chairman stated that the authority has been advised to collect material and further evidence against non-registered crypto exchanges. He informed that the relevant government functionaries have been assigned the task of initiating proper and necessary action against non-compliant crypto exchanges. The Chairman said further that strict actions will be taking against violators entailing imprisonment and monetary consequences.

Earlier in April 2021, a fintech law was introduced in Mexico which sought submission of certain information by exchanges to the regulator. The law required exchanges to submit information of their customers whose crypto transactions exceed US$ 2,911. However, since the implementation of the fintech law, there have been more than 3,400 complaints of breach of this provision. The Chairman also apprised that the complaints were found against all the 23 crypto exchanges carrying out business in Mexico.

In Mexico, generally, crypto exchanges are not appreciated in a good way. In fact, the government functionaries regard them as risky businesses because crypto provides shelter to cybercriminals and money launderers. Even the UIF-Mexico’s Chairman thinks that there is a connection between Mexican crypto exchanges and criminals. This very statement, the Chairman had made on several occasions.



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