An Ideas-Based Online Magazine of the Global Network for Advanced Management

Blockchain and Bitcoin: The Situation in Mexico

Bitcoin has been in the headlines since late 2017, as the value of the cryptocurrency shot up—and then sank almost as rapidly. But many financial professionals see greater potential in blockchain, the distributed ledger technology underlying Bitcoin. We asked faculty and experts across the Global Network for Advanced Management about the potential benefits and risks of Bitcoin and blockchain.

Financial technology platforms have become more popular within the investment and financing markets. Fintech companies, also known in Mexico as Instituciones de Tecnologías Financieras (ITF) [Financial Technology Institutions], look to offer a cheaper and more efficient service than that of a traditional bank by using technology such as web pages, social media, and phone apps.

The need to establish adequate ITF standards in Mexico led the Senate to approve the Law Initiative for the Regulation of Financial Technology Institutions which is currently being reviewed by the Chamber of Deputies. ITFs working with virtual assets must be able to, upon request, issue its customers with the amount of virtual assets of which they are the holder of, or the corresponding amount in the national currency, for the payment received from the transfer of the corresponding virtual assets.

Included within this sector are cryptocurrency organizations such as Bitcoin. Cryptocurrencies guarantee the security, integrity, and equality of their account statements (accountability) by means of a mutually verified network of agents (segmented file transfer or multisource file transfer). These agents, or so-called “miners” receive a small tip, which is divided between them randomly, and in return actively protect the network by managing algorithms at a constantly high rate.

This new ITS regulation in Mexico is an important step in the establishing of behavioral patterns that provide security to investors, debtors and to those who are responsible for the running of these financial technology institutions.