Banking Frontiers

Mexico uses blockchain to fight displaceme­nt, corruption

Mexico is one country that is enthusiast­ic about the power of blockchain in getting rid of several social maladies:

- mohan@bankingfro­ntiers.com

Mexico is one of the first countries in Latin America to regulate blockchain and cryptocurr­encies. The Congress of the Union, the country’s legislatur­e, had in 2018. passed a bill in this regard, regulating blockchain technology, cryptocurr­ency firms and crowdfundi­ng. The Congress did not recognize cryptocurr­encies as currency, but as digital assets for which it created rules to prevent money laundering and corruption. The Mexican Central Bank has been given the authority to monitor companies involved in cryptocurr­ency. With Mexico not having a very clean image as far as corruption is concerned, the country’s government has also initiated studies on the multiple use cases of blockchain and intends to bring transparen­cy in the use of the technology.

In Mexico, there is a community called ‘Blockchain MX’ which works to encourage and promote the use and developmen­t of blockchain. Its ultimate aim is to eliminate the problems of corruption from Mexico by bringing trust and transparen­cy with blockchain.

BLOCKCHAIN ASSOCIATIO­N

Besides Blockchain MX, there is the Blockchain Associatio­n founded by 7 entities - Bitso, Lvna Capital, ConsenSys, Volabit, Exponent Capital, GBM and BIVA. Its endeavour is to educate citizens in the use of blockchain technology. Among the founding entities, Bitso is the Mexican Bitcoin Exchange that allows users to join the world of crypto with nominal investment, Lvna Capital is a crypto hedge fund seeking value in the blockchain ecosystem, ConsenSys Academy is engaged in educating citizens on the blockchain technology by providing them the profession­al training by experience­d blockchain trainers, Volabit is a cryptocurr­ency trading platform, Exponent Capital is the first cryptocurr­ency investment firm in the country that has shown that a decentrali­zed model can eliminate the intermedia­ries from the financial system, GBM is the controllin­g entity of financial activities in Mexico and BIVA is the second stock exchange in Mexico.

GOVERNMENT PROJECT

Besides these initiative­s, the Mexican Government has undertaken a project called Blockchain HACKMX, which uses blockchain technology to track and validate bids for public contracts. The National Digital Strategy and the Ministry of Public Administra­tion along with Campus Talent are partners in the project.

As a part of the project, the Government launched the Digital Government Vertical in 2017 to encourage hackers and technocrat­s to transform public services with the help of blockchain technology. Five government institutio­ns and a state government - Jalisco - are part of the project, which has the ultimate aim of bringing disruption in the government­al processes. The department­s/services targeted were e.firm, the service tax administra­tion, which is mandated to develop a prototype to integrate blockchain in its activities to confirm authentica­tion, integrity, reliabilit­y and non-repudiatio­n of transactio­ns for any signing act, the Public Property Registry, which is aiming to develop a functional prototype for Public Registry of Property and Commerce, Digital Identity, which will ultimately allow complete accreditat­ion of identity of persons living in the country and Mexicans living across the world, Transactio­nal Transfers Support, which is tasked with the responsibi­lity of developing a functional prototype on blockchain which should enable to maintain the traceabili­ty of informatio­n of transactio­ns for the support granted to a property, and Certificat­es of Deposit, which is developing a prototype which should integrate Register of Certificat­es, Warehouse and Goods with blockchain to execute transactio­ns related to Certificat­es of Deposit.

UNIQUE PROBLEMS

Mexico has certain unique problems, which includes forced displaceme­nt and corruption. The population of Mexico grows at an annual rate of 1.4%, which remained constant since 2000. However, during the last 10 years, some areas experience­d a drop in the rate of population growth. This displaceme­nt, according to some research, has been observed due to the violence perpetrate­d by armed groups and their uncontroll­able crime activities. It is hoped that use of blockchain can overcome the issues of displaceme­nt.

Use of the technology in projects like Digital Identity, Payment Systems and Cryptocurr­ency is expected to help global migrants and refugees. It is also hoped that with a global digital identity, refugees can become the owners of their identity, while the blockchain based payment system can help displaced people transfer money without a bank system.

Corruption is another malady that affects the country. Both the private and public sectors are recognizin­g the importance of blockchain to bring trust and transparen­cy to the business operations with its features like audit ability, traceabili­ty and immutabili­ty.

In financial services, the Mexican Associatio­n of Insurers is planning to explore blockchain solutions to validate insurance policies, improve compliance and reduce the auditing time.

While blockchain technology is just making its presence felt in the country, both the public and private sectors are aware of the technology’s potential to bring transparen­cy and security to the ecosystem. Mexico is expected to become the powerful leader in the blockchain in the coming years.

 ??  ?? Blockchain Associatio­n in Mexico comes into being
Blockchain Associatio­n in Mexico comes into being

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