The government resumed the bill after it had stopped it last October due to demonstrations. The FinTech sector requests the government not to repeat the same mistakes that other countries have made.
The government of Chile reported last April 13th that they will introduce the FinTech bill into Congress in mid-2020. This news item celebrates the financial sector, which sees the regulation as an opportunity and an encouragement to ensure its growth.
Last year, the Chilean Financial Market Commission (CMF) appealed to the FinTech industry players in the country to form a working group to prepare a draft law to regulate the sector.
Several months later, they had to stop their work because of a social explosion that started in October 2019 and lasted for several months, which plunged the Chilean population into uncertainty and confusion.
The FinteChile Association groups 70 of the 130 FinTech companies that exist in the country, together with BDO Chile. They have been working together to promote the development of the industry, guiding the processes that will allow companies to self-regulate and better deal with the regulatory legal framework.
Challenges and Opportunities
Ángel Sierra, Executive Director of the FinteChile Association, told the local media that FinTechs must receive official recognition as financial providers. In this way, they can support the government and the society in complex situations such as those experienced due to the coronavirus pandemic.
The development of the financial technology industry began in 2010 and it has already built solutions, which effectively allow some companies to find access to financing and leverage for future projects. This may be a good opportunity for providing solutions to some companies that may not do very well shortly since many others seem doomed to fall and fail.
All central banks are injecting capital into the markets as there is a lack of liquidity. However, some available technological solutions represent an effective tool for reducing the production costs of many industries. Technological leveraging would allow taking advantage of the benefits that it has to give the economy a boost.
On the other hand, Sierra explained that the Chilean FinTech union is expecting three elements. First, they hope that the government will process the law as urgently and quickly as possible. That can allow Chile to use technology to capitalize on the democratization of finances without delay.
Second, they hope that the Chilean government does not repeat the same mistakes that other countries have made regarding the implementation of their respective FinTech policies, which became restrictive regulations that inhibit innovation in the financial industry.
Third, they want the government to visualize that the FinTech law is the catalyst for Chile to become the Financial Hub of the region.
The director of the FinteChile Association is convinced that the effects of the spread of the coronavirus in Chile could benefit cryptocurrencies such as Bitcoin, as well as FinTech services, in the processing of payments.
Sierra stated that cryptocurrencies have the resilience to fiat currencies as the former are backed by technologies and have a finite number. For instance, Bitcoin has a total of 21 million units and it stops there. On the other hand, no one knows exactly the underlying value or support of the US dollar and other banknote currencies.
Although the FinTech industry expects integration with traditional banking, the history of the latter in Chile indicates that it has restricted the operations of cryptocurrency-related startups.
By Willmen Blanco