In 2022, Indira Kempis, senator of the Mexican Congress, put forward a bill to make Bitcoin legal tender in the country. Apart from digital assets, Mexican regulation doesn’t establish specific treatment for the various types of tokens issued on a blockchain. Many jurisdictions and authorities have yet to enact laws governing cryptocurrencies, which means that, by and large, its legality remains unclear. Nevertheless, Bitcoin has become an important part of day-to-day life, with almost half of all the volume being processed through peer-to-peer marketplaces. Many people buy Bitcoin with a bank account or card payments. Banks support the development of cryptocurrency, so Mexico has a positive attitude towards cryptocurrency as a means of payment.
Mexico Could Be Following El Salvador’s Example on Bitcoin
In September 2021, Bitcoin was acknowledged by the laws as a mechanism to settle public and private debt in El Salvador, making it the first country in the world to adopt the cryptocurrency. The president of El Salvador, Nayib Bukele, affirmed that the adoption of Bitcoin would make it straightforward for citizens living abroad to send remittances to their relatives back home. The bill proposed by Senator Indira Kempis aims to imitate the action of El Salvador, adopting Bitcoin as a legally recognized national currency to ease the hardships of Mexican citizens struggling to access financial products and education. Up to this time, not much progress has been made regarding Bitcoin’s use as legal tender.
Arguments For Allowing Bitcoin as a Legal Tender
Bitcoin is an alternative economy, and, in principle, people should be able to exchange goods and services in an alternative economy if they want to do so. Cryptocurrency can support payment without the need to designate a third party to control the currency and the payment instrument, as it relies on a decentralized network of validators to maintain and update copies of the ledger. The question now is: Can Bitcoin actually be legal tender? Indira Kempis wants to bring blockchain technology back to its roots by making Bitcoin legal tender. In what follows, we’ll discuss the pros of officially recognizing and accepting Bitcoin as legal tender.
If You Have Bitcoin, You Can Make Transfers Anytime, Anywhere
The cryptocurrency markets are open night and day because they’re spread across a decentralized network of computers. Bitcoin is a peer-to-peer network, as mentioned previously, so transactions are almost instantaneous regardless of the physical location of the participants, meaning it’s useful for daily transactions and microtransactions.
Cryptocurrency is increasingly used in regions with limited access to traditional banking services. The removal of intermediaries results in transactions with full transparency.
Bitcoin Is a Good Inflation Hedge
Bitcoin is anti-inflationary due to its fixed supply and decentralized nature. More precisely, Bitcoin has a total cap of 21 million, so no new tokens will be released after the limit is reached. Roughly two million coins are left unmined, meaning the number of Bitcoins in circulation is slowly but surely reaching its total maximum supply. The digital asset is a natural hedge against inflation because scarcity protects its value over time. The reward for Bitcoin mining is cut in half every four years, which explains why Bitcoin has maintained an upward trajectory since it was launched in 2009.
No One Can Change Transactions on The Bitcoin Network
Bitcoin achieves censorship resistance via proof-of-work in which one party proves to others a specific amount of computational power has been expended. Simply put, the validation of payments doesn’t require input from central authorities or third parties. No one can rewrite the history of the shared ledger to serve their own needs due to the technical design of the blockchain. The point is that it’s not possible to reverse or censor transactions. Bitcoin serves people indiscriminately, democratizing financial opportunities, so it can be used to solve real-world problems.
Mexican Financial Authorities Say Cryptocurrency Isn’t Money
It’s worthwhile to mention that cryptocurrency isn’t supported by the Central Bank of Mexico (Banxico), which is against the introduction of Bitcoin into the country’s financial system. Cryptocurrency is believed to carry risk as a medium of exchange and store of value, which explains why no financial institution in Mexico is allowed to carry out or offer public operations with digital assets. Bitcoin is regarded as a means of barter – in other words, whoever receives cryptocurrency in exchange for a good or service is exchanging a good for a good, not money for a good.
For Bitcoin to be regarded as money, it must serve as a reliable payment method and preserve its value, at least in the eyes of the government. Bitcoin has been notoriously volatile, having its share of ups and downs. Every asset is volatile to some degree, but cryptocurrency is more volatile and can fluctuate in response to industry, political, regulatory, market, or economic developments. It can be vigorous, with gradual increases or decreases in price, or harsh, with unexpected price movements in either direction. Still, institutional investors and trading firms enter the cryptocurrency market with more conviction, and the derivatives market is also beginning to become publicly available.
Despite Backlash, Indira Kempis Is Optimistic Bitcoin Approval Will Continue to Build
Indira Kempis aims to make Bitcoin an integral part of the political agenda and, notwithstanding the criticism, continues to inform the Mexican public where legislators are on the bill. Although Mexico has several major cities serving as IT hubs and is home to a tech-savvy population that seeks innovative solutions, much progress needs to be made before Bitcoin becomes legal tender. In the beginning, there wasn’t much opposition to the bill, but now it’s beginning to draw attention, whether positive or negative. Following the installation of several Bitcoin ATMs, members of Congress and their teams are now asking questions.
The congressman from the state of Nuevo León aroused curiosity with a bill proposing a Central Digital Currency whose value is linked to the country’s official currency. Indira Kempis’ evolving stance now includes promoting Bitcoin’s legal acceptance. Chances are it’s going to be an uphill battle to accomplish this goal because people still have faith in their national currency, so it won’t cease to hold value. Nevertheless, Bitcoin isn’t a panacea.
