Brazil’s senate approves crypto regulatory framework
Brazil remains in the vanguard of the financial regulation in Latin America. The country’s senate on Tuesday approved a draft regulatory framework for cryptocurrency that would mean exchanges must be regulated and subject to fines and penalties in case of any violations.
Undoubtedly, the legislation will be a benchmark for other countries in the region seeking to understand and regulate the crypto phenomenon. The draft law still has to return to the lower house, where it could undergo further changes before being approved and sent to the government for promulgation.
Marco Castellari, CEO of the exchange platform Brazil Bitcoin, said the regulation will make it easier for institutional investors to enter the market. He added in a press release that the development of the sector will translate into investment and jobs in the coming years.
Senator Irajá Abreu, who’s overseeing the drafting of the bill, cites estimates that the cryptocurrency market in Brazil was worth about R$215 billion (US$43,167 million) in 2021. And that some 35 exchanges operated as of 2019 without any supervision by financial regulators.
Crypto companies say that regulating trading platforms will reduce the risk of pyramid schemes and fraud. But they also caution that this bill, or any future legislation, must take care not to impose a level of control that makes businesses unviable
Cuba approves authorizes crypto service providers
The Cuban central bank introduced regulation allowing authorized companies to provide virtual asset services. Analysts said that while the island nation is unlikely to become another El Salvador, the government may seek to facilitate remittances and foreign trade using crypto.
#MeLi vs Central Bank 🥊 🥊
Argentine e-commerce platform Mercado Libre has mounted a legal challenge against a central bank rule for wallets introduced in December that it describes as a “discriminatory and arbitrary act,” according to sources close to the process cited by local media.
The measure in question forces wallet operators, such as the company’s Mercado Pago payments arm, to deposit 100% of savings as legal reserve in the central bank, preventing fintechs from using the money for short-term investments or to finance lending.
Mercado Libre, Ualá and Argentina’s Fintech Association declined iupana’s request for comment. The association issued a statement in December rejecting the central bank’s move, which it said “inflicted enormous damage on the fintech industry.”
Fintech booms in Latam
Latin America’s fintech sector saw rapid growth between 2018 and 2021, with a 112% increase in the number of platforms, according to a report by the Inter-American Development Bank (IDB).
Rather than holding the industry back, the pandemic fueled its expansion.
Here’s some of the key regulatory developments, courtesy of our new service iupanaPro
Bitcoin proposed as legal tender in Mexico
Mexican senator Indira Kempis presented a bill to allow the Bank of Mexico to issue virtual assets. The legislator said it would be the first step to making Bitcoin legal currency, although Banxico is inclined to advance in its CBDC.
Argentina launches innovation hub
Argentina’s securities commission launched a forum to promote the sharing of knowledge and guidelines about fintech instruments and cryptocurrency among regulators and companies.
Peru touts digital transformation, but fintechs are doubtful
Fintech companies voiced doubts about new Peruvian rules that seek to strengthen public and private-sector collaboration on innovation to accelerate digital transformation. The law seeks to build on a 2019 resolution that established a laboratory for digital transformation of the stat
Minka raises US$24m
Minka, a Colombian fintech specializing in cross-border B2B payments, raised US$24 million in a financing round led by Tiger Global Management and Kaszek. It plans to use the proceeds to modernize its platform’s clearing infrastructure and create new products.
Revolut arrives in Argentina
Argentina has become the third country in LatAm where neobank Revolut is starting operations. Argentine users who download the app join a waiting list for a digital account. In recent months, the neobank has pursued an aggressive expansion strategy with the appointments of Juan Guerra and Glauber Mota as CEOs of its operations in Mexico and Brazil, respectively.
New leadership at SoftBank
Softbank reinforced its management team in LatAm following the departure of three key professionals in recent months:
Chile appoints new leadership at BancoEstado
Chilean President Gabriel Boric named BancoEstado’s new Board of Directors:
#3 questions with… Juan Carlos González
CEO of Expediente Azul, a startup that provides digital onboarding for financial company documents
1. What challenges does LatAm still face in achieving financial inclusion?
The culture of weak supervision and the continued promotion of the use of cash means that few companies are interested in understanding the unbanked sectors. In addition, there are organizations that benefit from the fact that money is still handled outside the banking structure because it doesn’t leave a trail.
2. What obstacles do fintechs and startups have to overcome to keep growing?
The first big challenge is regulation—surviving it. Here in Mexico, fintech authorizations are few and they’re also very costly.
Secondly, there’s fraud. It seems there’s no rule of law; criminals are not punished, let alone cybercriminals.
Finally, the culture of many entrepreneurs is to do it all alone, without considering leveraging other companies that can improve their processes.
3. What is the biggest obstacle you’ve faced in the workplace?
Without a doubt, taking on the competition. My competition is the status quo, the content attitude of entrepreneurs who live within their comfort zone and don’t risk change. The widely shared idea of not opting for digitalization and continuing with traditional processes, because they’ve always worked.
The promise of faster and cheaper remittances is still pending. Blockchain technology looms large as an alternative to the existing systems and is on the radar of giants such as Western Union:
In other news…
Over and out