The boom of innovations designed to update the traditional methods used in financial services has urged the Mexican Government to regulate this fast-growing sector. On March the 10th, the Senate approved a bill to establish a regulatory framework for FinTech startups, crowdfunding institutions and cryptocurrency firms.
The main purpose of the Fintech Law is to prevent money laundering and promote financial stabilityas it regulates operations, transactions and services offered by authorised Fintech Institutions or any financial entities.
In the following months, secondary laws created by the Mexican Banking and Securities Commission (CNBV) are expected to address specific topics on crowdfunding and online transactions.
How it improves financial services in Mexico?
The Law acknowledges that the information in the hands of financial institutions is the user’s property so it can be shared with other financial intermediaries with previous authorization through public application programming interfaces (APIs).
It would open opportunities for small and medium financial entities and Fintech startups to compete with traditional banks.
Virtual currency transactions
Mexican Central Bank would be in charge of authorizing the virtual assets that FTIs can operate with, under certain terms and conditions.
Largest Fintech market in LATAM
Mexico owns the largest Fintech market in Latin America with 238 Fintech startups distributed in 11 different segments. The following positions on the list are for:
- Brazil with 219
- Colombia with 124
- Chile with 75
Specialists expect that by 2022, the Mexican Fintech market will double compared to 2018, reaching up to USD$68,999 million.
With this initiative, Mexico has joined a small but growing list of countries that are taking actions to regulate Fintech firms.
At this stage, there are divided points of view. For some people the new Fintech Law is a crucial step in strengthening the industry and assuring the protection of clients’ personal information. Whereas, some Fintech startup owners consider this legislation as a barrier for entrepreneurs as it restricts innovation in the sector and stunts the growth of new companies.