Bank of France (representing the Eurosystem), Bank of Japan, Bank of Korea, Bank of Mexico, Swiss National Bank, Bank of England and the Federal Reserve Bank of New York will seek to work in partnership with a large group of private financial firms convened by the Institute of International Finance (IIF). 

Project Agorá builds on the unified ledger concept proposed by the BIS and will investigate how tokenised commercial bank deposits can be "seamlessly integrated with tokenised wholesale central bank money in a public-private programmable core financial platform."

According to BIS, this could "enhance the functioning of the monetary system and provide new solutions using smart contracts and programmability, while maintaining its two-tier structure." 

The BIS will issue a call for expressions of interest to private financial institutions to join Project Agorá. 

Requirement to identify customers involved in cryptocurrency trading

According to the Banxico Provision number 10/2018 the financial entities authorised to operate in the Interbanking Electronic Payment System (SPEI participants) must comply with the following obligations:

1. Identify among their clients those subjects (other than financial entities) that exchange or trade cryptocurrency in a regular and professional manner, in terms of article 17 of the Federal Law for the Prevention and Identification of Operations with Illicit Proceeds (Ley Federal para la Prevención e Identificación de Operaciones con Recursos de Procedencia Ilícita (the AML/CFT Law)).
2. With respect to clients mentioned in (1), only allow them to use demand deposit accounts with a financial entity, and collect from them the identification data referred in article 115 of the Credit Institutions Law (Ley de Instituciones de Crédito).
3. Refrain from opening any account to the clients mentioned in (1), in order to prevent such clients to offer their users these accounts for electronic fund transfers by SPEI.
4. Carry out additional validations regarding fund transfers to beneficiaries of the accounts mentioned in (1).
5. Have documented policies and procedures regarding the prevention of operations with illicit proceeds that include, at least, the activities that will be carried out to identify the accounts of the beneficiary clients referred to in section (1).
6. Refrain from making the resources available to the clients in (1) on the same banking business day on which those were received, when Banxico issues a notice regarding a situation in which SPEI participants must enhance their monitoring and alert mechanisms with respect to fund transfers by SPEI.
7. Refrain from issuing fund transfers in the name of the SPEI participant and on behalf of a third party, payable in any of the client´s accounts mentioned in (1) opened in the same SPEI participant or in any other.

Internal policy for client account identification regarding cryptocurrency trading

Banxico Provision number 11/2018 requires SPEI participants to establish a policy regarding the process for identifying client accounts that exchange and trade cryptocurrencies, according to the AML/CFT Law.

This process must be documented and attached to the authorisation request to Banxico to operate as a SPEI participant. Information regarding the application is defined in the Banxico Provision 14/2017.

Impact on cryptocurrency-trading platforms

Banks have raised concerns on how these provisions will affect market efficiency. For instance, financial entities now have to wait for a banking business day to process the fund transfer to the exchange.

Also, exchanges will have to comply with additional regulations making transactions take longer. Similarly, exchanges will have to follow client identification processes that will result in greater transaction costs.

Authorisation to exchange or trade cryptocurrencies

The AML/CFT Law states that the exchange of cryptocurrencies is considered a “Vulnerable Activity” and therefore financial entities or any entity authorized to exchange or trade cryptocurrencies must inform the Ministry of Finance (Secretaría de Hacienda y Crédito Público) of all operations over 645 units (Unidades de Medida y Actualización) which is equal to approximately $2,700 in a single operation or traded through a period of six months.

From 10 September 2019, all financial entities must comply with this disposition.

Also, the AML/CFT Law requires financial entities or any entity authorised to exchange or trade cryptocurrencies to have prior authorisation issued by Banxico in terms of the FinTech Law (Ley de Instituciones de Tecnología Financiera).

The FinTech Law establishes that its secondary regulations must include the authorisation requirements, the terms and conditions for financial entities, FinTechs and exchanges involving cryptocurrency trading, other operations that can be carried out with said assets, the measures for custody and control of the assets, among others.

The FinTech Law established a period of 12 months for Banxico to issue the secondary regulation mentioned above, therefore Banxico has until the end of March 2019 to do so.

Back in December 2017, the bill had been unanimously approved by the Senate, with 102 votes in favour, sending it to Congress for analysis.

The bill did not undergo amendments of any kind in Congress.

According to the Constitution of the United Mexican States, the president has 30 days to return the bill with further amendments in the event amendments are required and an additional 10 days to enact and publish it.

The Law seeks to build a regulatory framework aimed at the development of innovative financial services, increasing the level of competition and financial inclusion, as well as placing Mexico at the forefront of the industry.

Types of institutions regulated in the Law

The Law recognises two types of financial technology institutions (FTI) and an innovative model:

• Crowdfunding institutions. Crowdfunding institutions connect people so that investors can fund investment seekers through mobile applications, interfaces, websites or any other means of electronic or digital communications. 
• Electronic payment institutions. Electronic Payment Institutions offer services of issuance, management, accountability and transfer of electronic payments. The funds recorded in an electronic transaction accounting ledger and kept by an Electronic Payment Institution will be considered as electronic payment funds.
• Innovative model. The Law provides for the possibility of operating on a temporary basis under an Innovative Model–meaning the institutions that provide financial services through technological tools or means with different characteristics to the ones available in the market. A temporary authorisation will be granted to this type of FTI, in compliance with the Law.

Virtual assets

The Law considers virtual assets to be account units electronically recorded and used between the public as a payment method for all types of legal transactions and which transfer can only be implemented through electronic means.

Banco de México will determine, through general provisions, the virtual assets that FTIs will be able to use.

From the initial date of this Law, financial authorities will have the following deadlines to issue the following regulations:

• Ministry of Finance and Public Credit (known for its acronym in Spanish as “SHCP”)
• Six months: General provisions to establish procedures and methods to prevent and detect acts, omissions and operations that finance terrorism.
• Twelve months: General provisions to establish additional criteria and conditions to grant the temporary authorisation for the operation of Innovative Models.
• National Baking and Securities Commission (known by its acronym in Spanish “CNBV”)
• Six months: General provisions to establish the rules related to FTI accounting and business continuity plan.
• Twelve months: General provisions related to information accessibility on FTI operations, the use of equipment and technological means, the hiring of services with third parties, and the operation of Innovative Models and self-correction programs by FTIs.
• Twenty-four months: General provisions related to the requirements on capital requirements and establishing certain bases for data and information exchange.
• National Commission for the Protection and Defense of Financial Services Users (known by its acronym in Spanish as “CONDUSEF”)
• Twelve months: General provisions related to the FTI information regarding activities that must be reported to the financial authorities.
• Twelve months: General provisions to establish additional criteria and conditions to grant the temporary authorization for the operation of Innovative Models.
• National Commission of the Retirement Savings System and the National Insurance Commission (known by their acronym in Spanish as “CONSAR” and “CNSF” respectively.)
• Twelve months: General provisions to establish additional criteria and conditions to grant the temporary authorization for the operation of Innovative Models, as well as self-correction programs by FTIs.
• Twenty-four months: General provisions to establish the basis for the exchange of the data and information that may be shared.
• Bank of Mexico (known by its acronym in Spanish as “Banxico”)
• Six months: General provisions relating to the operations carried out by Electronic Payment Institutions, as well as activities linked to payment systems, and limits for the resources that may be maintained on behalf of their clients or which a costumer may use.
• Twelve months: General provisions regarding the virtual assets with which FTIs may operate, as well as the operations that may be carried out with said assets, the information related to their activities that shall be reported to the financial authorities, the additional criteria and conditions for the granting of the temporary authorisation for the operation of Innovative Models, as well as regulation for the self-correction programs. 
• Twenty-four months: General provisions to establish the rules for the exchange of the data and information that may be shared. 
• CNBV and Banxico jointly
• Two months: General provisions regarding the data security of Electronic Payment Institutions as well as the third-party services that they will be able to hire, and the equipment and technological means that they may use to carry out their operations.
• Twelve months: Collaboration agreement that will establish the form and terms for supervising FTI compliance, as well as the enforcement procedures that may be adopted by the corresponding authorities in exercise of their attributions.

Interinstitutional Committee

The Law also provides for the formation of a Committee of Financial Technology Institutions, which will be composed of six proprietary members, with two representatives from each of the following authorities: the SHCP, the CNBV, and Banxico; each one of them designated by the respective heads of said financial authorities.

The Interinstitutional Committee and the CNBV will be responsible, among other matters, for discretionally granting the necessary authorisations in accordance with the Law, so that FTIs operate correctly within Mexico.

The persons who are currently carrying out the activities regulated by the Law referred to in section I herein, will have up to 12 months from its initial date, to request authorization from the CNBV.

Said persons may continue to carry out such activities until the CNBV approves or denies their request, but while they do not receive the corresponding authorization, they must publish on their website that the authorization to carry out said activity is in process and therefore is not an activity supervised by the authorities.

The CNBV will automatically deny authorization if the respective persons fail to comply with this obligation.

According to Reuters, the bill cleared the upper house of the Mexican legislature and is expected to pass a final vote in the lower house, the Chamber of Deputies, by 15 December 2017.

The bill seeks to promote financial stability and defend against money laundering and financing of extremists.

As part of this, it proposes measures to regulate firms operating with virtual currencies such as Bitcoin.

The country's central bank, the Banco de Mexico, would be tasked with regulating exchanges and other firms that handle cryptocurrencies.

If approved, the precise details of the measure would still need to be ironed out in secondary legislation.

Assuming the bill gets passed, Mexico will join a short list of countries – such the U.S. and UK – that have moved towards regulating FinTech providers.