fbpx Skip to content

What is the “Fintech Law”?: All about the issue involving open banking and crypto

On March 23, 2017, the draft of a financial technology law was published in Mexico with the intention of regulating the administration, operation, and implementation of companies that wish to offer citizens access to an alternative form of investment and finance.

In its initial stage, this project was an early indicator of the desire for an open discussion between the Mexican financial industry and the Ministry of Finance and Public Credit. The central objective of this proposal was the issuance and regulation of electronic payments, as well as the approach to the topic of virtual assets or cryptocurrencies.

The crypto dilemma

Anyone who has a more than passing interest in finance and technology knows what a cryptocurrency is and the effect it has had on the international financial landscape in recent times.

Japan has what is considered one of the most progressive regulatory approaches regarding cryptocurrencies, recognizing them as legal property with the Payment Services Law. China, in contrast, prohibited financial institutions from processing cryptocurrency transactions; also prohibiting the local exchange houses and the ICO, in 2017. Experts believe that it is a matter of time for China to publish a law that regulates this sector that really can not control.

Other countries have changing approaches to the way they handle cryptocurrencies and virtual assets. But most accept the fact that cryptocurrencies are here to stay. The United States, for example, is basically dealing with companies that handle cryptocurrencies under the laws that govern non-banking financial institutions or MSBs (Money Service Businesses).

The Mexican approach

After the draft of the proposal, the Fintech law of Mexico finally materialized at the end of last year. It introduced a series of approaches commonly used within the industry to regulate mass data, cryptoactives and crowdfunding, emphasizing the search for transparency with the intention of generating confidence and security for the general public.

On this, the General Director of Prevention of Operations with Resources of Origin of the National Banking and Securities Commission (CNBV), Sandro Garcia-Rojas believes that, “this legislation not only aims to protect the stability and integrity of the financial system, but also to promote greater competition and avoiding 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 widespread today, but many times its real meaning is misinterpreted. According to Mr. García-Rojas, the term “open banking” means one thing above all else, and this is to give users more control over their information:

The open banking gives the users of the financial system the 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. In order to implement these measures, the FinTech Law establishes that financial institutions are obliged to create standardized computer applications programming interfaces (API’s) that allow connectivity and access by designated parties or third parties to the information of your clients. This will allow greater competitiveness and the creation of customized financial services. General Director of Operations Prevention with Source Resources of the CNBV, Sandro Garcia-Rojas

Crypto and money laundering: a special case?

Since its inception, cryptocurrencies and bitcoins in particular have been mistakenly associated with money laundering. The way in which this should be handled has been a hotly debated issue, but the Mexican Law of FinTech considers that it only requires few additions and changes for better management, according to García-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 are the same as the rest of the subjects that act in the financial system, since a balance between the different sectors is required. However, a component is added that, although they already exist 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.

Being a lawyer with Masters degrees in several subjects, including Economic Penal Law, Sandro García-Rojas is qualified to talk about this topic in detail. In addition, he has held several positions in the federal public administration of Mexico, which makes him an authority on the subject.

Sandro Garcia-Rojas will occupy a central place from 9 to 11 April

He is pointed as one of the most anticipated speakers at IMTC LATAM 2019. The largest cross-border financial services event in Latin America to be held at the Gran Fiesta Americana Hotel in Cancun.

With an explicit objective of illuminating the potential of the FinTech industry in Mexico, the regulatory framework occupies a prominent place in this year’s IMTC LATAM agenda and the assistants of remittance, payment and FinTech companies, both in Latin America and the United States, As from Europe, they will be able to give their points of view in the various talks focused on this topic. This promises to be an important year, being able to be a turning point for the Mexican scene.

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 will can bring to the region. The potential exists; We need governments to visualize the future that lies ahead of us”.

Also published on Medium.

Published inFintech

Be First to Comment

Leave a Reply

%d bloggers like this: