Thursday, June 13, 2024

Banco Azteca’s Bitcoin support draws a warning from financial bodies

Financial authorities have warned that cryptocurrencies are not legal tender and that financial institutions that integrate their use will be subject to sanctions.

The joint statement by the banking regulator, the Bank of México and the Finance Ministry came after Banco Azteca owner Ricardo Salinas Pliego said he planned to allow customers to operate with Bitcoin, the world’s leading cryptocurrency.

Salinas called Bitcoin “the new gold” and argued in favor of its value as an investment opportunity and a parallel currency option for his bank’s clients. “At Banco Azteca we are working to bring [Bitcoin] to our clients to continue promoting [financial] freedom,” he wrote Sunday on Twitter.

The Monday statement by financial authorities sought to put a check on Salinas’ plans. “The financial authorities reiterate their warnings … on the risks inherent in the use of so-called ‘virtual assets’ as a means of exchange, as a store of value, or as another form of investment,” the statement read.

“The country’s financial institutions are not authorized to carry out and offer operations to the public using virtual assets, such as Bitcoin, Ether, XRP and others in order to maintain a healthy distance between  [those virtual assets] and the financial system,” the statement continued.

Finance Minister Arturo Herrera reiterated the position at a news conference, saying that under current rules cryptocurrencies are prohibited from being used in the financial system, and that regulation is not likely to change.

There are reasons to be wary of Bitcoin’s immediate integration: the cryptocurrency’s valuation has had a turbulent recent history. It fell to a five-month low last Tuesday, due to China’s crackdown on cryptocurrency mining and trading after reaching a high of US $63,000 on April 13.

However, the premise is also a threat to financial authorities, who are used to central banks having authority over currencies. In contrast, Bitcoin has not depended on any central institution since its anonymous creation in 2009.

Salinas is no neutral bystander. Banco Azteca is one of the country’s leading remittance processors, which are increasingly being sent in Bitcoin. He is also something of an ally to the president, having previously backed a bill that would have forced the Banxico to buy up foreign cash.

The entrepreneur is worth about US $15.8 billion according to Forbes, making him Mexico’s third richest person. He runs TV Azteca, Mexico’s No. 2 television broadcaster, and Grupo Elektra, a retailer founded by his grandfather in the 1950s that targets lower-middle class consumers.

With reports from Reuters

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