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Mexico: Warning Issued on Risks of Using Bitcoin

(June 4, 2014) In April 2014, Mexico’s National Commission for the Protection and Defense of Users of Financial Services (CONDUSEF, a government agency under Mexico’s Department of the Treasury) issued a statement explaining the risks of using Bitcoin and similar virtual assets. (Press Release, CONDUSEF, Alerta CONDUSEF sobre uso del bitcoin como medio de pago, (Apr. 7, 2014).)

CONDUSEF’s statement warned the public about the risks in the acquisition of virtual assets, as they are very different from legal currencies for a number of reasons, including the following.

· Bitcoin is not a legal currency; therefore, institutions regulated by the Mexican financial system are not authorized to use this virtual asset or to perform transactions with it.

· Bitcoin is not regulated by Mexico’s financial authorities; therefore, there is no recourse for those who engage in Bitcoin transactions in cases in which they may have been victims of fraud or loss due to a sudden and abrupt change in the value of this type of asset. In this sense, all Bitcoin transactions are final.

· Bitcoin is very different from the Mexican peso, which is a legal currency issued by Mexico’s Central Bank that is fully accepted in exchange for goods and services, as the peso is backed by current regulations.

· In other countries, Bitcoin is believed to have been used in illicit transactions, such as money laundering and fraud. (Id.)

For these reasons, CONDUSEF “warned that any individual or business that uses or accepts virtual currencies as a means of payment does so at their own risk and on their own responsibility, because the use of this type of asset entails high volatility and potential monetary losses.” (Id.)