What is Bitcoin according to Mexico’s legal system? Here is the anwer.

In a former post I gave a slight characterization of Mexico’s commercial laws, as old-world laws; however, it would be important for you to know a couple of additional things about Mexico’s legal system. 

We are not a common law system, like the US or UK (and commonwealth countries), so our law is not made by judicial decisions (although we care about Mexico’s Supreme Court’s interpretation of our statutes and rules); instead, we are a civil law system (like France, J'aime la vie!), so we submit to the rule of statutes enacted by Mexico’s House of Representatives (or state legislatures) and to the regulations issued by the executive branch, always that such regulations are in accordance with the statutes (yeah man, when such regulations are against or not foreseen by statutes we do not need to comply with them!  And our courts will acknowledge that).

Notwithstanding we live under a civil law system, we have freedom of contract in its purest form that enables us (and foreigners in Mexico) to do whatever we want, unless a statute enacted by Mexico’s House of Representatives “expressly” prohibits such activity or transaction.  So if it is not expressly prohibited we can do it, and if it is prohibited no matter if such prohibition is against common sense, free-market or the benefit of the parties, any agreement to the contrary will be considered null and void by a Mexican court.

The actual practice of our Mexican civil law legal system, gives a great value to legal-formalism or formality in transactions and civil-procedures; so if the legal requirements are not met, the transaction is invalid and the civil-procedure is lost even if there is a honest underlying will or intention.  A very powerful Mexican (which was CEO of Pemex, our state owned petroleum company) used to say that “formalism is substance”; for example if you lend me money and ask me to write you a promissory-note, and I issue the promissory-note in your favor, but I fail to write the word “promissory-note” in it, then the document is worthless and is not legally considered a negotiable instrument or even a proof of debt.

Bro thanks for the information, how kind, but I started reading because you were going to tell me what is Bitcoin according to Mexico’s legal system!

I used to go on Mondays to the Bitcoin Center NYC and afterwards to the Belfry to have some drinks (and afterwards to the Beauty Bar, and then to Artichoke Pizza, but you do not need to care about this) with the Discuss bitcoin over drinks' guys to talk about rising criptocurrencies and Bitcoin, and at that moment I did not even started to understand what Bitcoins are, and sometimes they asked me about how are they considered in Mexico; months of close study to Bitcoins and Mexican laws, have given me the opportunity to come with this straight single answer, Bitcoins are this:


Oops! I got lost, I think you lost your train of thought!  For your information I didn’t, because Bitcoins are “nothing” in Mexico’s legal system, the actually do not exist.

And are you saying this on your own, or is there any one to support you?  Yes, precisely  Mexico’s Central Bank feels pretty up the same about this, such authority released a press communication on March 10, 2014, saying that Bitcoin or any cryptocurrency:

- Is not legal tender in Mexico.

- Is not issued or backed by Mexico’s Central Bank (hey thanks for telling us!).

- Does not have any capacity to cancel payment obligations (as money does, in accordance with Mexican laws).

- Is not regulated nor supervised by Mexico’s Central Bank (as securities and derivatives are, take note of this for blockchain based autonomous "contracts").

- May not be used by Mexican banks, nor they are authorized to engage in transactions with them.

Bitcoins are not recognized or acknowledge by any statute, they do not have any similarity to anything else, nor they represent any kind of juridical-right; so I was telling you before about the importance of legal-formalism and being “expressly” mentioned in a statute, so if this does not happens, then to the eyes of Mexico’s legal system you do not exist.  Maybe that is the reason why Mexico’s Central Bank issued a press release and not some rules, regulations or binding recommendations (as it is constitutionally entitled to do, in order to regulate currency-exchanges, brokerage and financial services)?

At Bolido App (the company I mentioned you in another post, which I’ve cofounded) we have been working with Mexico’s House of Representatives for the last 2+ years, doing the digital communication to all the new acts and bills that are passed, and I can tell you (this is no private information either) that there is no reform in the loop to start acknowledging Bitcoin.  I personally don’t think there would be one for the next 2-3 years, since they are more preoccupied by economic-energy reforms, like breaking a 75-year state monopoly on oil drilling in order to attract companies such as Exxon Mobile Corp. to invest in Mexico.

So where does this leaves us?  It leaves us with a blank paper in front of us in which we can write whatever we want; the only limit is our vision.  You could open in Mexico an online Bitcoin casino, that would only take Bitcoins (yeah, no money) and you would have no problems from a legal perspective; also, you could do any Bitcoin-regulated activity in any other part of the world, and in Mexico you wouldn’t have any problem (hey, this is no Lettre de Marque! So surely the other country would try to prosecute you or your company). 

As finale, I think that Mexico might become a type of Bahamas, an offshore financial centre, for Bitcoin.  


Author: Victor Aguirre