On March 23, 2017, a new law was drafted in Mexico pertaining to financial technology. Inside the bill lawmakers propose for the first time a regulatory framework for the administration, operation, and implementation of companies who wish to offer citizens access to an alternative form of investment and finance.
Initially, it was an early indicator of the desire for an open discussion between the finance industry in Mexico, and the Ministry of Finance and Public Credit.
At the center of the proposal was the issuance and governing of electronic payments, as well as tackling the issue of virtual assets or cryptocurrency.
The crypto dilemma
Anyone with more than a passing interest in finance and technology will know what cryptocurrency is and the effect it has had on the international financial landscape.
China, very much at the forefront of international news due to their dealings with the United States, banned financial institutions from processing cryptocurrency transactions in 2013, and took that a step further by prohibiting ICOs and domestic crypto exchanges in 2017.
Japan, in contrast, has what is widely considered one of the most progressive regulatory approaches when it comes to cryptocurrency. Recognized as legal property under the Payments Services Act, Japan currently enjoys status as one of the biggest markets for cryptocurrency on the planet.
Other nations have ever-changing approaches to the way they deal with cryptocurrency and virtual assets, but by this stage, most are accepting of the fact that cryptocurrency is not a passing fancy.
It’s here to stay.
Following the draft proposal, Mexico’s Fintech law eventually arrived late last year.
Introducing a number of commonly used approaches from within the industry to regulate big data, cryptocurrency, and crowdfunding, the emphasis was firmly placed upon seeking transparency while “generating greater security and confidence of the general public by providing certainty that these entities are properly regulated and supervised”.
Speaking on the matter, the General Director of Prevencion de Operaciones with Recursos de Origenién Ilicita of the CNBV, Sandro Garcia-Rojas believes that: “This legislation not only seeks to protect the stability and integrity of the financial system, but also to promote greater competition and to avoid the concentration of participants who can offer financial services in order to create options that adapt to the needs of all sectors of the population.”
Open banking in its purest form
Open banking is a term that we see thrown around a lot today but often-times the real meaning behind it is misunderstood.
For Mr. Garcia-Rojas the term “open banking” means one thing above all: giving users more control over their data.
“The open banking, gives users from the financial system control of their data, in this way, these users have the ability, through the granting of certain permits, to share their financial information with different companies.”
“To implement these measures, the Financial Law, obliges Financial Institutions to create standardized computer applications programming interfaces (APIs) that enable connectivity and the access of the indicated subjects or third parties to the information of their customers.”
“This will allow greater competitiveness and the creation of tailored financial services.”
Crypto and money laundering – a special case?
Since its inception, we’ve seen cryptocurrency and Bitcoin in particular associated with money laundering.
How this issues should be tackled is another hotly debated topic, but the Mexican FinTech Law sees no need to rip up the mainstream financial playbook. A few additions and changes are all that are required according to Garcia-Rojas.
“The FinTech Law, in its Article 58, establishes the obligations that the Financial Technology Institutions and the companies authorized to operate with Novelty Models must comply with in terms of prevention of money laundering and financing of terrorism (PLD / FT).”
“These obligations, in general terms, are the same as the rest of the subjects that participate in the financial system, since a balance between the different sectors is required. However, a component is added that, although it already exists in the regulations, in this sector acquires the force of law, that is, the professionalization of two of the main actors in the prevention of the commission of these crimes.”
A lawyer with a Master’s degree in a number of subjects, including Economic Criminal Law, it’s clear that Sandro Garcia-Rojas is well placed to discuss this matter in detail, and having held various positions within the federal public administration of Mexico, he is undoubtedly an authority on the subject.
Sandro Garcia-Rojas will take center stage in April, from the 9th to the 11th, as one of the most anticipated speakers appearing at IMTC LATAM 2019. It is the largest cross-border financial services event in Latin America and will convene at the Grand Fiesta Americana Hotel, in Cancun, Mexico.
His explicit aim is to shine a light on the potential of Mexico’s FinTech industry and there will not be a better time for it. Regulation is high on the agenda at this year’s IMTC Latam and attendees can expect the new law to see mention in various talks focused on regulation. This promises an important year ahead that could prove a major flashpoint for the Mexican scene.
The dream is that, in such a large nation where many citizens are unbanked, they could in future find immense benefit from a stable cryptocurrency. If Sandro Garcia-Rojas can help steer crypto from its still-nascent context to maturity and as a result, greater adoption, then Mexico could be one of the best placed to replace its financial infrastructure with something entirely new.
Hugo Cuevas-Mohr, Director of the IMTC, shares the desire of many experts on the subject: “The dream is that Latin America, with the leadership of Mexico, can find the immense benefit that the development of innovative financial services based on new technologies, can bring you to the region. The potential exists…we need governments to visualize the future that lies ahead of us.”
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