Fintech. New Legal Financial Entity.
This legal entity is a new addition to the list of Entities that are subject to the authorization and supervision of the Comisión Nacional Bancaria y de Valores (Mexican National Banking and Securities Commission), with the novelty that it allows electronic payments, collective funding and virtual assets, which are securities, such as Bitcoin, that were not previously covered by any other legal entity.
Below is a summary of some sections of the text of the Law:
- An authorization by the Comisión Nacional Bancaria y de Valores (CNBV) is required for getting incorporated and operating as a Financial Technological Institution (ITF), and they must disclose information that allows their customers to identify the risks involved in their operations.
- They will be required to disclose the risks clearly and in a simple manner over their Internet website or whichever means they use to render their services, specifying that virtual assets are not a legal tender, nor backed by the federal government or the Bank of Mexico (Banxico).
- They will be required to inform about the inability to revert operations once executed and about the volatility of the value of those assets, and the inherent technological, cybernetic and fraud risks.
- They will only be authorized to operate in the virtual assets that are determined by Banxico, and they will be required to be able to deliver the amount of virtual assets he owns, or equivalent amount in legal tender, to the customer at his request.
- Neither the federal government nor the pseudo-government public administration entities will be able to take responsibility or guarantee customer resources that are used in operations performed via the ITFs.
- ITFs are forbidden to sell, assign or transfer their property or give away the virtual assets under their custody, and which they control on behalf of their customers, as a loan or guarantee.
- ITFs are required to report any information related to their activities to the CNBV, Condusef and Banxico, as well as establish a methodology to perform a Risk Assessment over their operations.
- A penalty of 30 to 150 thousand UMA (Mexico's Unit Of Measure And Update) may be applied for performing operations with virtual assets or currencies without prior authorization, or operating with different assets than those established by it.
The benefits of the digitalization of financial products are evident in regard to practicality, modernity and trends for the times we are living in. However, we need to be aware that digitalization is pointless if not compounded by an individual and collective improvement in the handling of finances in Mexico. Notwithstanding the foregoing, this Fintech law needs to be in line with the challenges we are currently experiencing so that it can safeguard the stability and integrity of the financial system, and especially protect the consumer.