FinTech and Cryptocurrency Export Jason Simon on Mexico’s new stablecoin initiative

Bowen Zhou, CEO of Moneta Digital, introduced in mid-June the MMXN token, billed as “the first Mexican stablecoin.” It has a conversion rate that promises to always be 1 MMXN to 1 Mexican peso and, unlike other cryptocurrencies like Bitcoin or Ethereum, MMXN is a stablecoin. Other stablecoins on the market, which are pegged to the US dollar, are Tether (USDT), Paxos Standard (PAX) and Binance USD (BUSD), but other countries are working on their own versions, as well. Jason Simon, an expert in FinTech and cryptocurrency, discusses what the MMXN could mean to the cryptocurrency space.

According to Moneta Digital, a stable-priced digital currency is a prerequisite of mass adoption of blockchain technology in Mexico, which allows the transfer of an asset from one place to another without the intervention of third parties. Since the MMXN is the first stablecoin pegged to the Mexican peso, there is no direct competition in the country. “The MMXN competes indirectly with other stablecoins pegged to the dollar,” explains Simon. “It will reportedly provide services for a different market since users in Mexico have the need to use a stable currency linked to their native currency.”

A report by CoinMarketCap highlighted that, during the first quarter of 2020, cryptocurrency users aged 18 to 24 increased in nine countries, compared to the previous quarter. There were nine countries that reported growth of more than 80%, of which Mexico was one. Its adoption growth was recorded at 97.33%, which is a clear indication that national cryptocurrencies can survive in the country. Some of the other countries include Australia (158.07%), Canada (112.45%), Colombia (85.07%), Spain (120.71%) and the UK (91.48%),

According to Moneta Digital, the capitalization of the cryptocurrency market in Mexico is currently approximately $400 million dollars and growing. Although MMXN is issued by the Moneta Digital Company with Delchain and Deltec providing custodial services, the stablecoin is still receiving resistance. Explains Simon, “The two entities supporting MMXN are licensed and regulated by Bahamian financial regulators. However, Mexican authorities and banks aren’t yet ready to show their enthusiasm. This is likely to change within the next two years, but, in the meantime, the new Mexican stablecoin can only continue working to gain a more solid footing.”

The MMXN isn’t yet, nor will it ever be, a replacement for the Mexican peso and it is not considered a fiat currency or an investment asset. However, it was designed to add value to the Mexican economy so that it can stay ahead of the curve compared to other Latin American countries or even globally. That goal has been achieved, with additional acceptance coming.