Mexico Doubles Down on Crypto Distance as Banxico Warns of Rising Risks

Source: ETHNews Original Title: Mexico Doubles Down on Crypto Distance as Banxico Warns of Rising Risks Original Link: Mexico’s central bank is reinforcing its cautious stance toward digital assets, emphasizing that cryptocurrencies must remain at arm’s length from the country’s formal financial system.

In its December 2025 year-end report, Banxico underscored growing concerns about volatility, cybersecurity, and the unchecked expansion of stablecoins, issues it believes could introduce systemic vulnerabilities if not tightly controlled.

A Restrictive Framework, Not a Ban

Banxico’s approach does not outlaw cryptocurrencies, but it erects strong barriers preventing them from entering the regulated banking sector. Digital assets are not recognized as legal tender, and the Mexican peso remains the country’s only government-backed currency. The central bank stresses that cryptocurrencies lack intrinsic support from any public authority, reinforcing their position as speculative instruments rather than monetary units.

Under the 2018 Fintech Law and subsequent Circular 4/2019, banks and other regulated institutions are largely prohibited from offering crypto-related services to the public.

They cannot run exchanges, provide custody, or develop investment products tied to digital assets. Their only permitted use cases involve limited internal operations, and even then, only with explicit prior authorization, which Banxico rarely grants.

Stablecoins Emerge as a New Point of Concern

The report signals escalating attention on stablecoins, warning that their expanding use without a dedicated regulatory framework could pose systemic risks. Banxico argues that even assets marketed as “stable” can introduce vulnerabilities if their backing structures and governance mechanisms are not thoroughly supervised.

This aligns with the institution’s broader view: crypto assets, regardless of category, represent technological experimentation that should remain outside the core financial system until clearer safeguards exist.

Non-Financial Entities Face Their Own Obligations

While regulated financial institutions face strict limitations, non-financial businesses, such as crypto exchanges, can still operate in Mexico. However, they are designated as “vulnerable activities” under AML laws. This classification triggers significant compliance obligations, including rigorous KYC requirements, enhanced transaction monitoring, and mandatory reporting to authorities.

The goal is to mitigate risks without shutting down the sector entirely, keeping Mexico’s crypto ecosystem alive but heavily insulated from traditional banking channels.

A Strategy Built on Containment

Banxico’s latest statements reaffirm a regulatory model based on containment rather than adoption. The central bank’s position remains clear: cryptocurrencies can exist, but they must remain safely distanced from institutions that underpin the national financial system. As global markets move toward more integrated crypto frameworks, Mexico continues to prioritize caution, stability, and risk mitigation above rapid innovation.