For companies that engage in trade activities in Mexico, these amendments are a significant milestone in the development of digital commerce. It will reduce the paperwork and administrative burden associated with traditional credit processes, making it easier for businesses to engage with transactions. These amendments will also benefit enterprises that need to file legal actions against their debtors for collection purposes, as include an efficient and secure way to collect a debt backed by a pledge on the assets of the certificate of deposit. In addition, the amendments oblige judges to consider electronic credit instruments as valid evidence in court, making legal proceedings more efficient.

Overall, these amendments mark a positive step forward in the development of digital commerce in Mexico.

Key takeaways

1. The amendments introduce significant changes that will impact the use of certificates of deposit and credit instruments in Mexico.
2. The amendments seek to reduce costs, ensure transaction clarity, and provide control and transparency for all participants.
3. The reform opens the door for companies to explore process improvement through digital transformation.
4. Blockchain technology will facilitate the achievement of these objectives by enhancing data integrity and security, ensuring transparency and traceability of information and enabling real-time access to transactions.
5. The amendments allow the issuance and endorsement of credit instruments electronically and implement an efficient encrypted system for certificates of deposit. These changes will simplify the creation, issuance, transfer, registration, execution of transactions and exercise of rights for these instruments.
6. The amendments simplify and make collection processes more efficient. The auction of assets subject to the certificate of deposit is now expedited through an electronic and encrypted system. These amendments are a significant improvement from the previously complicated process of collecting pledge bonds (certificados de prenda). Besides, judges are now bound to consider electronic versions of credit instruments as evidence in a trial.

In depth

The amendments to the General Law on Negotiable Instruments and Credit Transactions and the General Law of Credit Organizations and Auxiliary Credit Activities entered into force on 27 March 2024. These amendments are a significant step towards a more secure and traceable system for certificates of deposit and credit instruments. These amendments bring several benefits, including:

• Reduce costs for the use of paper certificates of deposit issued by the General Warehouse and facilitate access to credit.
• Decrease cases of fraud by providing a source of information that enables traceability between real creditors and debtors in a transaction involving stored goods.
• The amendments also introduce a standardized mechanism designed to ensure clarity in situations where a financial institution acquires a certificate of deposit or a pledge over the goods subject to them. Its purpose is to maintain fairness and transparency in such transactions.
• Establish control and transparency for all participants in these transactions to identify who has the best right to the goods.

Implementing a decentralized system and leveraging the power of blockchain technology will facilitate the achievement of these objectives. This technological improvement will enhance data integrity and security, ensure transparency and traceability of information and enable real-time access to transactions regarding certificates of deposit.

To meet these objectives, the amendments make the following main changes:

Changes to the Regulation on Credit Instruments

• Credit instruments can be legally issued and endorsed electronically without any loss in their validity, legal effects or enforceability and are valid evidence in a trial.
• The condition that a credit instrument must be issued in a written form shall be considered fulfilled if it is issued through electronic means, provided that it is maintained in its entirety, complete and unaltered, and is available for future review. Any changes that occur in the ordinary course of communication shall be considered valid, provided they can be traced.
• The Commercial Code deems an electronic signature as fulfilling the requirement to sign, provided it can be attributed to the signer.
• A judge will have to consult the existence and circulation of the credit instrument when the debtor opposes the payment.

Changes to the Regulation of Deposit Certificates

• Certificates of deposit will be issued only in electronic form using the cryptographic system authorized by the National Banking and Securities Commission. This system will govern all aspects of the creation, transmission, reception, delivery, and any other actions related to certificates of deposit.
• The issuance of the pledge bonds (bonos de prenda) is no longer required. In case of a pledge on goods, the certificate of deposit should contain information about the secured credit. The constitution of the pledge will be done by registering it in the cryptographic system of certificates of deposit by the creditor. It is the creditor's responsibility to ensure that all the necessary details are accurately stated in the certificate.
• The holder of the certificate of deposit can pay the tax authorities and the general warehouses by transferring control of the title to the cryptographic system.
• If the holder of a certificate of deposit is a pledgee, they can request payment from the debtor through the cryptographic payment system no later than two business days after the pledged credit term expires. If the payment is not made, the creditor can notify the system of non-payment through the cryptographic system. After eight days, the General Warehouse must initiate a public auction of the deposited goods. The creditor can participate in the auction to acquire the goods, offsetting its credit. If the auction cannot be performed, the creditor can take direct action against the person who first negotiated the certificate of deposit, the subsequent endorsers, and the guarantors.
• The annotation of pledges on negotiable instruments can be done electronically.

As seen, the amendments have two primary purposes:

• It introduces an efficient encrypted system that streamlines the creation, issuance, transfer, registration, execution of transactions and exercise of rights for certificates of deposit. This system significantly reduces the burden of traditional paperwork, benefiting businesses and individuals alike. 
• It enables the use of digital versions of credit instruments such as promissory notes, bills of exchange and checks. This digitalization speeds up the issuance and transaction process and enhances security.

Significantly, the amendments simplify the collection of receivables. The auction of assets subject to the certificate of deposit is now expedited through an electronic and encrypted system. This is a significant improvement from the previously complicated process of collecting pledge bonds.