Mexico has placed itself in an advantageous position in Latin America in the field of technology-mediated finance, with the approval of the Fintech Law last March 1st and its subsequent promulgation by President Peña Nieto.
Criptonoticias consulted with three specialists from the fintech area to request their opinions on the concrete benefits of this law in the Mexican financial system: Eduardo Guraieb, general director of Fintech México; Carlos Valderrama, co-founder and CEO of Hyperblock and Felipe Vallejo, manager of Regulatory Affairs at Bitso, the largest cryptocurrency exchange in Mexico.
Eduardo Guraieb argues that the most important benefit of the Fintech Law is that it has brought legal certainty to several areas of financial activity that were not covered or defined by the existing legislation.
There are large companies from other geographies that have wanted to invest in the Fintech sector in Mexico for some time but did not do so due to fears and doubts about the regulatory environment. By offering certainty, the new law will enhance the attraction of investments in financial technology companies, making Mexico the epicenter of financial innovation and Fintech in Latin America.
Eduardo Guraieb
Managing Director, Fintech México
REGULATORY COST
On the other hand, Felipe Vallejo de Bitso, indicates that the operation of the exchange offices will be modified in favor of the security of the users. The precise details of those changes will be contained in the secondary legislation, since the law defines general principles, says Vallejo. "Of course, there is a regulatory cost for fintechs. The magnitude of this cost will be defined in the secondary laws, so it is important that the Fintech sector intervenes so that there is no over-regulation. "
The secondary legislation, that is to say the respective regulation of the law, will modify the current operation of the exchange houses, says Vallejo. For example, it determines the way in which the money exchange offices manage the money of the clients that is in custody, the separation of accounts, or the limit of money in sight accounts, among other modifications. Also the exchange houses should establish KYC procedures (abbreviations in English of the Know Your Customer guidelines), in addition to the creation of a formal corporate governance within the companies.
The Mexican bank will have up to two years to issue the final list of authorized virtual assets. Meanwhile, the exchange houses will be able to operate with the assets that have listings when entering the application application for the license. Cryptocurrencies that are not included in the list will be considered vulnerable activities according to the transitory provisions. This means that a report must be generated per transaction before the Financial Intelligence Unit.
Felipe Vallejo Dabdoub
Manager of Regulatory Affairs, Bitso
SANDBOXES
One of the preferred terms of the Fintech world is "sandbox", which originally refers to a sandbox in which children can play in a controlled environment, in the area of the digital economy it describes a way to develop policies regulations on a very innovative area.
Carlos Valderrama, CEO and co-founder of Hyperblock, a company that serves as a center of exchange between entrepreneurs, risk investors and blockchain companies, refers to the inclusion in the Fintech Law of a temporary authorization for companies and banks to test business models that are not included in the portfolios of the ITF that are contemplated in the law.
This scheme for testing novel models only existed in the regulatory framework of nine countries, such as the United Kingdom, Malaysia, Singapore, Hong Kong and Australia, among others, and now Mexico adopts this modality that allows for the birth of new services, with deadlines stipulated to demonstrate its feasibility.
Carlos Valderrama
Co-founder and CEO, Hyperblock
THE USER'S DATA
One of the aspects of greater benefit of the Fintech Law in which the three interviewees agree that it will promote competition in the financial sector, is the one that refers to the obligation of all financial institutions - and not only Fintech - to use standardized application programming interfaces (APIs) to promote open banking.
The purpose of this provision of the law is to allow, with the authorization of the user, certain transactional data can pass from one institution to another. Experts agree that if users can share their transactional data, a small Fintech will be able to offer specific services tailored to each client. This would expand the range of services.