Today we’re venturing to Mexico to explore the role of Fintech within the nation’s legal framework, and while the specific law in question is not necessarily new, the development of crypto and virtual asset platforms and services means revisions and modifications are always going to be needed.
Fintech, or Financial Technology, is a service sector which encompasses tools such as online banking or crypto marketplaces, and essentially underpins all financial activity taking place virtually.
Why is this so important? Well, if we look back only a couple of years to the pandemic and the havoc that it caused amongst most industries, finance is one of the most integral elements to most of our lives, be it small or large transactions each and every day. This means that by developing more tools and systems online, we can reduce our dependence on physical branches of banks, for example, and develop alternatives which are easier for everyone.
What is Mexico’s Fintech Law all about?
Ratified in March 2018, the Financial Technology Institutions Regulation Law was implemented to cover the regulation of electronic monetary payment and crowdfunding platforms, as well as Sandbox startups. The eagle-eyed readers amongst you will have noticed that there is no explicit reference to cryptocurrency in the mission statement of this law, and this is something we will come back to in a little while.
Aside from this, you may be wondering who specifically is responsible for such regulation in Mexico, and the list includes:
· The Ministry of Finance and Public Credit
· Bank of Mexico
· National Banking and Securities Commission
· National Commission for the Protection of Users of Financial Services
· National Retirement Savings System Commission
· National Insurance and Finance Commission
· Bank Savings Protection Institute
This is indeed a long list, however, with all of these bodies working in harmony to regulate the sector, you should have the peace of mind that any issues will be resolved promptly either for you personally or professionally, allowing your virtual financial activities to be carried out smoothly.
How can I make sure my business is compliant?
Below you can find a list of the main requirements for your business in order to be eligible for licensing under Mexico’s Fintech Law:
For Crowdfunding platforms: minimum 500,000 UDI (Mexican Unidad de Inversión, a more economically stable conversion to that of the Mexican peso) for those providing one form of transaction, 700,000 UDI if providing more
For Electronic Money Institutions (management, accounting etc.): 500,000 UDI if only operating in Mexican currency, 700,000 if operating in others
What about crypto?
Mexico is currently LATAMs biggest Fintech hub, with over 450 startups in the industry. This is huge, and only set to grow over the coming years as technological innovation continues to thrive on the continent. With such projected growth, it comes as no surprise that four years after the initial passing of the Fintech Law, the Bank of Mexico has announced that they plan to bring into circulation a Central Bank Digital Currency by 2024.
Why is this important? It indicates a forward thinking and exciting prospect within the nation for Fintech. However, the 2018 law still leaves a lot to be desired in terms of cryptocurrency regulation…
It has been stated that the law needs to be made broader to encompass the innovation that we have seen taking off over the last year such as NFTs and other tokens of this sort, as otherwise the regulatory framework in Mexico won’t cover them and will cause quite the headache for investors and companies looking to incorporate new Blockchain technology into their activities.
So, if you are interested in finding out more about Mexico as a hub for crypto-asset activity, as well as other opportunities to develop your business, contact us today! Below this article, you will find a link to set up a free fifteen-minute consultation with us to discuss your options further.
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