Chile is another of the Latin American countries that advanced in a law to regulate its sector of financial technology companies, commonly known as fintechs. The project includes both non-traditional financial services companies, such as apps and neobanks, but also players from the world of cryptocurrencies. Specifically, the law seeks to include in its scope of application the supervision of exchangesseeks to define the legal status of crypto assets similar to that of a “digital representation of units of exchange for money, goods or services” and also assigns the Financial Market Commission the supervision of exchanges and cryptocurrency custody providers.
The law is reminiscent of what was proposed by the Commission for the Financial Market (“CMF”) published in February 2021which already established certain limits to the basic technologies of the fintech sector, such as crowdfunding platforms or custody of financial instruments. This first approach to regulation also created an Open Finance System (better known as Open Banking) to facilitate the exchange of customer information between different providers of financial or related services. In fact, the CMF will have a place of surveillance and jurisdiction over fintech.
Indeed, the Fintech Law establishes that Fintech companies must provide information to financial clients and the general public, as well as to corporate governance and risk management. Finally, to be able to operate, Fintech companies must have the authorization of the CMF and be registered in the corresponding registries. In the same sense, fintech companies must take advantage of an open banking system through remote and automated access interfaces that will be designed so that they interact with institutions that provide information such as banks and stockbrokers, institutions that provide services based on in information, and providers of payment initiation services.
The new law was approved by 136 votes in favor and the Minister of Finance, Mario Marcel highlighted that “this was a suitable project, which went in the right direction, which aimed to generate greater competition in the financial market, to stimulate innovation and regulate this sector of the industry that was not regulated”.
“Currently, fintech companies provide financial services through technological means, but they lack regulation. This represents risks and prevents these institutions from competing correctly with the financial sector. This project takes charge of that reality and proposes a framework that fosters competition, innovation and financial inclusion, provides legal certainty and provides greater security to these services.”, mentioned the Undersecretary of the Treasury, Claudia Sanhueza.
In summary, the new law seeks to reinforce both data protection duties and money laundering prevention while attempting to reduce the asymmetry between new fintech companies and traditional financial agents.
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