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Latino Daily News

Wednesday March 12, 2014

Mexican Bank Warns Customers of Risks of Virtual Currencies

The public should be aware of the risks inherent in using virtual currencies, like bitcoin or litecoin, as substitutes for conventional payment methods, the Bank of Mexico said.

Virtual currencies do not have “a relevant penetration” rate in the domestic market, but the public should be aware that these digital currencies “are not legal tender because the Bank of Mexico does not issue them or back them,” the central bank said in a statement.

Digital currencies are not issued or backed by any foreign monetary authorities, the Bank of Mexico said.

“Their function as a means of payment is not guaranteed and businesses and other people are not obligated to accept them,” the central bank said.

Mexican financial institutions “are not authorized to use or to engage in transactions with” digital currencies, the Bank of Mexico said.

“In other jurisdictions, their use in illicit transactions, including those related to fraud and money laundering, has been identified,” the central bank said.

The Japanese government said last Friday that it would classify bitcoins as a commodity and not a currency, taking the first step toward creating a regulated market for transactions involving the virtual currency.

Bitcoins, a digital currency created in 2009, are bought and sold on a peer-to-peer network free of central control and government regulations.

Japanese officials took action in the wake of the collapse of Mt. Gox, a bitcoin exchange that at one point handled the majority of global trades in the virtual currency and whose bankruptcy affected about 100,000 customers.

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