A recent proposal for monetary legal reform introduced by Senator Indira Kempis, representative to the Mexican Congress, was questioned by public opinion about her intentions regarding the adoption of Bitcoin in that country.
The senator stated her intention to make bitcoin (BTC) legal tender in Mexico from one of the main stages of the Bitcoin Conference 2022, held in Miami last week. Also, he reiterated his plans in a exclusive interview with CriptoNoticias from that same event.
However, last Wednesday, April 6, the senator introduced two legal reform initiatives in the congress of her country, none of which mention bitcoin or other decentralized digital assets.
According to the official gazette of the Mexican Senate, the proposals introduced seek to reform the national Monetary Law in two aspects. The synopsis of the first proposal says:
“It proposes to establish that the Bank of Mexico should seek the application of technology for the timely transition of the Mexican economy and will be in charge of its planning.”
The synopsis of the second proposal reads:
“It proposes to include virtual assets as part of the digital species that may be circulating in the national territory, for this, it establishes that only the central bank may be the one who issues a digital currency.”
This second reform proposal, which modifies article 2 of the Monetary Law, establishes that the central bank is the only entity authorized to issue physical metallic coins, but also the only entity that can issue a digital currency.
Advertising
In fact, the formulation of the reform is as follows: “The only circulating virtual currencies and assets will be: d) the digital currency of the central bank.”
Now, it seems to be the intention of Senator Indira Kempis, the proposed addition of article 24 to the Monetary Law could be the key for the central bank of Mexico to assume the responsibility of applying the necessary technology and strategy to improve the Mexican economy.
The article to be added says:
“Article 242.- The Bank of Mexico will seek the application of technology and will be in charge of planning for the timely transition of the Mexican economy.”
Although for bitcoiners, central bank digital currencies or CBDCs are a threat to individual freedoms and they represent the opposite of what Bitcoin pursues, The senator points out that this is one of the first steps before proposing a Bitcoin Law.
Next, we reproduce the interview that Indira Kempis held again with CriptoNoticias, in order to show her statements in full and let our readers draw their conclusions.
Louis Esparragoza: Hi Indra. I would like to talk with you about the new monetary law reform and your goal of adopting Bitcoin in Mexico.
Indira Kempis: Hi, of course.
YOU: As you have already seen on the networks, people wonder why the law does not mention Bitcoin.
IKE: It is one of many initiatives, we have not yet reached the bill. In Mexico, the only one with the power to decide the legal tender currencies is the Bank of Mexico. Doing an analysis, we find that this is a step. Otherwise there is no matter to discuss it in the Legislative Power.
YOU: What parts of the law need to be reformed so that the central bank has the capacity to accept Bitcoin?
IKE: Many. That is why the announcement was to begin a process that encompasses different laws. Above all, when the position of our central bank remains conservative in this regard.
YOU: And after digital currencies, will the Bitcoin law itself come?
IKE: We are doing a legal analysis so that the proposal can pass in the best possible way. So far we are the only team in Mexico working on this. The challenge is to achieve it with the fewest obstacles. It is not a linear process, it is parallel and it is collective. Only in the Mexican Legislative Power there are 628 congressmen, imagine the dimension of the discussion. It’s huge, there are many processes.
YOU: It happens that many people thought that the proposal of Bitcoin, as a legal tender, would be presented very soon, as he suggested at the conference.
IKE: Of course not. I want our financial system to be decentralized. Every beginning needs a process, my position is decisive towards a more prosperous, inclusive and free economic future for my country. We are taking impeccable steps legally speaking. There is mistrust, I know. But, we will not go back in that process that we began for Mexico.
YOU: Ok, but the central bank digital currency (CBDC), as the name says, is centralized. Do you think that Bitcoin can coexist with a CBDC at the same time? What is your ultimate goal? Make Bitcoin legal tender or allow its acceptance as a form of payment?
IKE: What we now have to decentralize is the decision. Which at this time is exclusive to Banco de México. That is why there is no discussion, unlike in other countries. We want Bitcoin to be legal to tender. I can’t find any other way for financial inclusion to be possible. In the end, the right of all people to be included must be asserted.
YOU: Many people question whether you are pro Bitcoin, since CBDCs represent the opposite. Even in the explanation of the initiative, intermediaries are mentioned as part of the financial system, but Bitcoin does not need them. In addition, the digital currency is added to the circulating metallic currencies as the only accepted ones, but no bitcoin or virtual assets. Why not open the door to other virtual assets as a prelude to bitcoin?
IKE: Because there is confusion and legal ignorance about what happens in the legislative processes in Mexico. But we are going to pave the way for a clear and at the same time legally impeccable process. Virtual assets are already contemplated in our Fintech Law. They are virtual assets, not coins.
YOU: So will you make any reform to the Fintech law? Because the Monetary Law does not allow for what is expected to be achieved
IKE: It is necessary to work on both laws, that is why I insist that this is not a law, it is one of several initiatives. In fact, we also enter inclusion and financial education as a human right. They don’t talk about those, but they are there.
YOU: That’s true. So, the responsibility for inclusion and financial education falls on the central bank?he?
IKE: No. Those should be constitutional rights and they also open the door to discussion.
YOU: Of course, they are constitutional rights, but which institutions exercise them?
IKE: In Mexico, our Political Constitution of the United Mexican States, art 1:
In the United Mexican States, all persons shall enjoy the human rights recognized in this Constitution and in the international treaties to which the Mexican State is a party, as well as the guarantees for their protection, the exercise of which may not be restricted or suspended, except in cases and under the conditions established by this Constitution.
YOU: What are the next steps to follow to adopt Bitcoin in Mexico?
IKE: We will announce them. Stay tuned, here we go.
Tension between Bitcoin and the Bank of Mexico increases
Taking into account the senator’s strategy, it is hard to see how Bitcoin can become legal tender in the future. The senator commented with CriptoNoticias during her first interview that she aspires to follow in El Salvador’s footsteps, however, the conditions for it do not seem to exist.
The Bank of Mexico (Banxico) strongly opposes Bitcoin and it does not rest on achieving the issuance of its centralized digital currency (CBDC). CriptoNoticias recently reported that the BCM intends to launch its CBDC by 2024, seeking to offer the same benefits as cryptocurrencies, but in a centralized manner.
In addition, they criticize bitcoin for its volatility, but also stablecoins for being in private handscontradicting his desire to centrally manage the money that all Mexicans can use.
On the other hand, as the senator pointed out, the bureaucracy in Mexico is tremendous. In the congress there are more than 600 senators who deliberate on the different proposals, and in addition, the approval of Bitcoin as legal tender (lawful tender) would confront the BCM and other government entities.
That is why Indira Kempis affirms that “the decision must be decentralized”, but the short-term probabilities seem to be very small.