Mexico readies bill to regulate fast-growing fintech industry

MEXICO CITY (Reuters) - Mexico would regulate its fast-growing financial technology sector, including firms that use crypto-currencies like bitcoin, to protect consumers and spur competition, under a proposed bill seen by Reuters.

Mexico's President Enrique Pena Nieto attends the Dialogue of Emerging Market and Developing Countries in Xiamen in southeastern ChinaÕs Fujian Province, Sept. 5, 2017. REUTERS/Mark Schiefelbein/Pool

The proposed legislation, which Mexican President Enrique Pena Nieto said this month would be unveiled in the Senate before Sept. 20, seeks to ensure financial stability and defend against money laundering and financing of extremists.

The new measures will allow Mexico to join a small list of countries, including the United States and Britain, that have sought to regulate fintech firms.

Financial services firms envisage massive potential growth in Latin America’s No. 2 economy by reaching the more than 50 percent of Mexico’s roughly 120 million citizens without bank accounts.

“This (legislation) recognizes the need that a sector as dynamic as that of technological innovation needs a regulatory framework that allows authorities to mitigate risks and allow for growth in a competitive environment,” the bill draft says.

The bill says it aims to set out clear rules and reduce costs to users. That should drive competition in a sector that includes crowd-funders and payment firms, it says.

The bill also proposes measures to regulate companies operating with virtual currencies like bitcoin, although it does not provide much detail. The central bank would be tasked with refereeing such operations, the document says.

The bill will be examined first by an independent commission, and then go to the Senate for a vote. If it is approved, the finer details would be hashed out in so-called secondary laws.

“The regulation is good news for all companies in this sector because ... growth will be greater with clear rules,” said Luis Ruben Chavez, the founder of Mexican crowdfunding firm Yotepresto.

Another industry source, who declined to be named as he was consulted in the drafting of the bill, said Mexico was the fastest growing market for fintechs in Latin America.

“We went from less than 50 (companies) in 2015 to 158 in 2016, and we already have over 240 this year,” he said.

Reporting by Sheky Espejo, Editing by Gabriel Stargardter and Rosalba O’Brien