Fintech regulation could drive competitive growth in Mexico

Mexico joins countries like Germany in its new move to regulate fintech

Mexico is making the greatest strides in Latin America when it comes to regulating the fast growing fintech industry.

A new bill doing the rounds promises to protect consumers and stimulate competition, keep a watchful eye over payment security and cryptocurrencies, and prevent money laundering or terrorist funding.

It’s a notably progressive step for Mexico to take. It will join a select number of other countries like Germany that have introduced explicit fintech legislation. According to Federico de Noriega Olea, partner at the Mexican offices of law firm Hogan Lovells, the law should provide more legal certainty for firms to carry out and expand their businesses, which may also mean greater access to funds.

It will at the same time place greater responsibility on companies to adhere to the rules, such as meeting capital requirements and reporting obligations. The more mature companies that have been carrying out some form of self-regulation may be better equipped to deal with this change. Younger companies that have just launched may struggle to adapt.

“The rules will definitely create a barrier to entry,” says de Noriega Olea. “Any regulation is in itself a barrier to entry. Again, the degree of such a barrier will depend on secondary regulation. I don’t believe the regulator is planning to create a high barrier to entry because one of the main goals of the proposed law is to foster competition.”

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