Bitcoin

Bitcoin transactions ‘akin to bartering,’ Bank of Mexico governor says

The governor of the Bank of Mexico, Alejandro Díaz de León, dismissed Bitcoin’s (BTC) position as a reliable legal tender, citing price volatility as a major roadblock towards full-fledged adoption. 

Governor Díaz de León said in a Reuters interview that Bitcoin’s position in today’s financial system resembles “a dimension of precious metals” when compared to the central bank’s fiat money.

In stark contrast to El Salvador’s mainstream Bitcoin adoption that requires businesses to accept payments in Bitcoin, Mexico’s central bank chief questioned Bitcoin’s position as a viable legal tender:

“Whoever receives bitcoin in exchange for a good or service, we believe that (transaction) is more akin to bartering because that person is exchanging a good for a good, but not really money for a good.”

Díaz de León also highlighted the inherent risk of daily price volatility when dealing with cryptocurrencies. Coincidently, the Salvadoran government was a witness to this risk just one day after recognizing Bitcoin as a legal tender and buying its first 200 BTC worth $10.4 million at the time of purchase.

Taking advantage of the situation, El Salvador’s President Nayib Bukele announced the purchase of more Bitcoin during the dip, resulting in a total holding of 550 BTC. According to President Bukele, this move saved his administration “a million in printed paper.”

Mexico’s central bank governor pointed out the need for reliability in terms of payment executions and value stating “people will not want their purchasing power, their salary to go up or down 10% from one day to another. You don’t want that volatility for purchasing power. In that sense, it is not a good safeguard of value.”

Related: Mexico may not be following El Salvador’s example on Bitcoin… yet

As Cointelegraph reported on June 28, authorities from Mexico’s finance ministry issued a warning against institutional offerings related to digital currencies, highlighting risks related to payments and value fluctuation.

The regulators have also said that no financial institutions in the country are authorized “to carry out and offer to the public operations with virtual assets,” including Bitcoin, Ether (ETH), and XRP.