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The global commercialisation of products and services in general, and financial services in particular, has been affected by a technology-driven radical transformation. Due to this trend, the financial industry updated its technology within its regulated and supervised environment, as well as developed new business models that did not fit within the existing legal framework for financial institutions.¹

In Mexico today, fintech is regulated by legislation that emphasizes financial inclusion, innovation, consumer protection, financial stability, anti-money laundering, and countering terrorism financing.¹

Mexico's Fintech Law introduced the following products:

1. crowdfunding: the creation of specific entities (crowdfunding institutions (IFCs)) that would serve as marketplaces for peer-to-peer lending, equity crowdfunding and co-investments in assets;
2. e-wallets: the creation of specific entities (electronic payment fund institutions (IFPEs)) that would allow the collection of funds in Mexican pesos, foreign currency or digital assets from the general public and would hold those funds in custody on behalf of clients, making payments, acting as money transmitters and serving as crypto marketplaces;
3. open finance rules: rules under which regulated financial institutions must share information on products and services, aggregated statistical information or client transactional data through standardised application programming interfaces (APIs); third-party providers would be licensed to access these APIs;
4. virtual assets: the Fintech Law provides a definition for virtual assets and allows certain institutions to transact with these assets, subject to secondary regulations issued by the central bank; and
5. regulatory sandbox: the Fintech Law introduced a regulatory sandbox through which an entity may request a temporary exemption to specific regulations, to test a given innovative model in a controlled environment. ¹

Apart from the Fintech Law, other financial laws have been amended to implement the following models:

• electronic signatures: wording was added to financial laws to allow the use of electronic signatures in financial services. Onboarding regulations were also updated to document a process for remote onboarding;
• robo-advisers: regulators are now able to amend secondary regulations to allow licensed financial advisers to automate advisory and asset management;
• money transmitters: IFPEs are now allowed to render money transfer services; and
• transparency and consumer protection: transparency and financial consumer protection laws were updated to consider IFCs and IFPEs and to acknowledge a digital onboarding and user experience. ¹

The majority of Mexican financial services are provided by entities incorporated under Mexican law and registered or authorized to operate as such. Registrations and authorisations for financial entities are granted or sanctioned by the Mexican central bank (Banxico) or the National Banking and Securities Commission (CNBV).¹

As a result of the Fintech Law, two specific entities are permitted to provide fintech services: IFCs and IFPEs (together referred to as financial technology institutions (ITF)). For a detailed discussion of IFCs and their operations, see Section IV.ii. IFCs are authorised to conduct crowdfunding activities and provide a marketplace for peer-to-peer lending, equity crowdfunding, and co-investments in assets.¹

A IFPE, on the other hand, can collect funds from the public in Mexican pesos, foreign currency or digital assets, hold those funds in custody on behalf of clients, manage e-wallets, make payments, act as money transmitters, and serve as crypto marketplaces. For a detailed discussion of IFPEs and their operations, see section IV.iii. They can also issue debit cards and participate in payment networks.¹

Mexican corporations are granted ITF authorizations (for both types of entities) after:

• the entity's business plan, compliance manual, operating manual and technology infrastructure have been vetted;
• minimum capitalisation requirements have been secured; and
• the corporate governance and ownership structure have been approved, among other requirements. ¹

Crowdfunding in Mexico

Fintech in other countries

Notes

1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/mexico