On Dec. 5, 2017 Mexico’s Senate approved a bill that would regulate its rapidly expanding financial technology (fintech) sector, including crowdfunding and cryptocurrency firms. “The new laws, which seek to promote stability and defend against money laundering, are also expected to pass through a final lower house vote,” explains financial analyst Pablo Soria de Lachica. If approved, Mexico will join a small, but growing, list of countries, including the United States and Britain, that have sought to regulate fintech businesses.
The goal of the change, said Pablo Soria de Lachica, is to provide legal clarity for companies, including those working with bitcoin, that are creating new variations of traditional products and services. As currently written, the measure would specify that cryptocurrencies are not legal tender in Mexico, and all firms that deal with them would be officially regulated by the country’s central bank. If passed, the bill has the potential to reduce operational risk, enhance transparency and improve security for borrowers and lenders. Furthermore, it has the potential to alter the competitive landscape and broad market dynamics, including implications for banks and non-bank financial institutions (NBFIs) that have been increasing their exposure to fintech firms through equity investments, joint ventures and participation in start ups.
Mexico presently has one of the largest fintech sectors in Latin America, featuring around 150 start ups that focus on a wide range of services including payments and remittances, crowdfunding, marketplace lending and financial management. There is also still ample growth potential due to the country’s large size, high rate of penetration of mobile phones and internet, and a substantial unbanked population. As traditional banks and NBFIs recognize this potential, they have begun to invest in fintech businesses or develop their own, a trend that Soria de Lachica expects to continue in the long term. The draft legislation would place the supervision of these firms under the National Banking and Securities Commission (CNBV) and the Commission for the Protection and Defense of Financial Services Consumers (CONDUSEF). Crowdfunding companies’ assessments of users’ creditworthiness would fall under regulation, and they could also be asked to consult and submit credit information from a bureau and communicate their methodology for determining borrowers’ risk to the CNBV. In addition, all fintech firms would be required to list on a registry of companies offering financial services through online platforms and have adequate infrastructure to prevent money laundering and protect against cybersecurity risks. Soria de Lachica predicts that these rules would improve asset quality and the performance of fintech companies, as well as make competitive conditions fair for all financial market participants.
Pablo Soria de Lachica is an internationally acclaimed broker and foreign exchange expert. As a collaborator with Kartoshka, a global leader at the forefront of the latest sales, telemarketing and customer support technologies, Soria de Lachica provides a unique perspective and professional guidance on international trading, developing online tools for investors, conducting market analysis, establishing new branches, and more.
Pablo soria – Professional Profile – LinkedIn: https://mx.linkedin.com/in/pablosoriadelachica