Trump’s Victory Could Push Cryptocurrency Regulation in Mexico

After Donald Trump’s victory in the US elections, the cryptocurrency market has reached record highs. This might push Mexican regulatory bodies to work on a broader digital asset policy to boost adoption in the country. 

Bitcoin closed 2024 with a 123% annual gain, peaking at an all-time high of US$108,250 in December before ending the year at US$94,719. Catalysts included the US Securities and Exchange Commission's (SEC) approval of 11 spot Bitcoin exchange-traded funds (ETFs) in January of 2024, Bitcoin’s halving event in April, and President-elect Donald Trump's pro-crypto campaign promises, including the creation of a strategic national Bitcoin reserve.

“Bitcoin has transitioned from a niche asset to a mainstream financial instrument, attracting significant institutional investments,” says Guilherme Nazar, Vice President in Latin America, Binance, for El Economista. 

Trump's election and appointment of Paul Atkins, a known advocate for digital assets, as the next SEC chair signals a potential shift toward crypto-friendly regulations. Following Trump’s election victory in November, Bitcoin surged by 34.85%, underscoring the market’s response to his proposed policies. His public endorsement of Bitcoin’s historic US$100,000 milestone further solidified his support for digital currencies.

In Mexico, these developments could prompt renewed interest in the regulatory approach to virtual assets. Álvaro Vértiz, Partner and Director, Dentons Global Advisors, highlights that the US consideration of a Bitcoin reserve could pressure Mexican regulators, such as Mexico’s Central Bank (Banxico) and the National Banking and Securities Commission (CNBV), to rethink their cautious stance.

“Should the United States create a strategic Bitcoin reserve, it would compel the world to reconsider its perspective on these assets. In Mexico, it could encourage financial authorities to explore closer integration of cryptocurrencies into the financial sector,” says Vértiz.

Banxico maintains a “healthy distance” between cryptocurrencies and the traditional financial system, as reiterated in its Financial Stability Report for the second half of 2024. But Trump’s election could bring change. “This openness could lead to greater acceptance of cryptocurrencies as diversification tools, not just through existing platforms but also via investment operators and fund managers. Regulators should incorporate this issue into their agendas, particularly as the United States accelerates its engagement with Bitcoin,” says Vértiz.

Starting in 2023, Mexico has opened 10 Bitcoin ATMs across the country. These devices offer users a way to interact with cryptocurrencies, functioning similarly to conventional ATMs but with features tailored for digital asset transactions. To use a Bitcoin ATM, users must have a cryptocurrency account. Registration can be completed directly at the ATM, requiring an ID, email address, and username. Once the account is set up, users can buy and sell Bitcoin and other digital assets. 

“This type of virtual currency is not regulated by the financial authorities and all transactions are irrevocable, so there is no way for users to file a claim in case they suspect that they are or have been victims of fraud or a loss, due to a sudden and abrupt change in its value or suspension in its quotation,” reads a warning by the National Commission for the Protection and Defense of the Users of Financial Services (CONDUSEF). 

In 2024, cybercriminals stole US$2.2 billion in cryptocurrencies, a 21% increase from the previous year, as previously reported by MBN. Centralized platforms were disproportionately affected, with inadequate private key management identified as a major vulnerability. One of the largest breaches occurred in May when Japan-based DMM Bitcoin lost US$305 million. Experts continue to emphasize the importance of robust cybersecurity measures to protect investors as market prices climb.

Bitcoin’s rising adoption and deflationary nature have bolstered its appeal, especially against the backdrop of US Federal Reserve interest rate cuts. The broader cryptocurrency market also experienced significant gains, with XRP leading with a 310.55% increase, followed by Dogecoin’s 298% growth, as previously reported by MBN.