Mexico’s government has passed a legislative bill designed to regulate financial technology firms, as well as the circulation of cryptocurrencies, such as Bitcoin.
The bill, yet to be signed into law by the country’s President Enrique Pena Nieto, may help authorities crack down on money laundering and prevent financial frauds.
For lenders, it reduces operational risk by enhancing transparency. More than anything else, the law will spawn a slew of payment firms and crowd-funders.
A law to regulate the industry was in fact long overdue in Mexico, as many local fintech firms have been offering payments and remittances, crowd funding, marketplace lending, and financial management.
Under the new law, the central bank has to shoulder the responsibilities of regulating firms dealing with virtual currencies, in addition to framing guidelines for crowd-funding.
A Reuters report says the law permits open banking, or the sharing of user information by financial institutions through public application programming interfaces (APIs).
Much of the details of the law will only be known when the regulators unveil so-called secondary laws.
US ratings agency Fitch has applauded the bill, saying Mexico has significant growth opportunities for fintech firms because of its large size, high number of mobile phones, and substantial unbanked population.
Mexico City is one of the fastest growing markets for fintech firms in the Americas, according to Deloitte’s Index of global fintech hubs. Some of the country’s fintech startups include Kubo, MiMoni, Kuspit, Tan Tan, Bankaool, Bitso, Bayonet, Clip, and Broxel.