Main challenges and concerns of regulators in Latin America regarding crypto assets

On December 16, 17 and 18, the “Fintech Global Regulation and Supervision Practices” event organized by the Association of Banking Supervisors of the Americas (ASBA) was held in Mexico with the support of the Inter-American Development Bank IDB-LAB, which aimed to discuss the practices associated with the Fintech and cryptoactive sector. For this event, around 56 jurisdictions from the five continents were reviewed with the objective of attending the following (ASBA, 2019):

1. Specific regulations of the Fintech sector.

2. Fintech business models.

3. Practices in relation to Fintech products.

The event featured regulators from regions such as Bahamas, Brazil, British Virgin Islands, Chile, Costa Rica, Curacao, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Panama, Peru, Saint Kitts and Nevis, Suriname, Brussels. The topics that were addressed, in addition to analyzing other types of Fintech companies, had an analysis of how to treat the cryptoactive industry and its possible regulation in each of the regions.

Understanding the ecosystem by regulators

One of the first discussions that was generated was the way regulators are having an approach with cryptoactive companies. In this case, some representatives such as those from Chile, Mexico or Honduras, mentioned that they have formed multidisciplinary working groups integrating different representatives related to the ecosystem from public and private institutions.

The regulators of Honduras indicated that the first approaches with the “crypto” industry have been carried out through a public-private table that they convened and from that, they could carry out a mapping on the processes of Fintech companies. Some countries like Curacao said that, although it is true the issue of cryptoactive has been quite discussed, they still do not have an Association that allows them to have a better rapprochement with the sector.

In the case of Peru, it was mentioned that there are no established standards for these companies, but they have an Association which has been important since it is responsible for reviewing everything related to the Fintech and cryptoactive sector, and reviewing the degree of suitability. They indicated that they have found cases of cryptoexchanges where users have not been able to withdraw their money, causing these companies to question their credibility. In that scenario, what proceeded was that the Association itself decided to withdraw the exchange from its list in order not to run a reputational risk.

In general, most of the regulators present agreed that the Associations of each country are a fundamental piece that allows communication between the government and the private sector. The relevance of this type of entities, is that they manage to combine the opinion of the different companies and in the end, it allows them to develop more specific and transcendent points.

User Protection

Most countries recognize that Blockchain technology has been important and has great potential; However, for the authorities, good practices towards users are fundamental since frauds through Ponzi schemes were relevant. In that sense, it is important for regulators that the authorities have a complaints system for users of digital platforms, such as cryptoexchanges or investment schemes.

For example, in Mexico, the General Director of Evaluation, Supervision and Financial Protection of the National Commission for the Protection and Defense of Users (Condusef) indicated that they already have the first complaints identified by some users. Therefore, those who request financing have been requested to use crypto-assets or anyone who requires a financial service through a digital platform, who have a league where the commissions are detailed. Specifically in the case of cryptoexchanges, it would be necessary to indicate that a company of this type “does not generate returns or monetary benefits for the balances accumulated by them”. In addition, you have to add the legend:

“The virtual asset is not a legal tender and is not backed by the federal government or the Bank of Mexico. The value of virtual assets is subject to volatility and there are technological, cyber and fraud risks inherent in virtual assets. ”

In addition, he stressed that there are healthy practices which a digital platform such as cryptoactive, can not violate, for example:

1. Not provide misleading information about financial services; that is, that the investor is very clear about the risk to which he is subject and the obligations of the applicants.

2. Enter conditions that do not match the contracted offer, that is, the commissions or services provided, cannot be conditioned on other activities or purchase of products.

3. For companies that request financing, no fees should be charged in advance.

4. Advertising must be consistent with what the platform has stipulated before the Law.

5. Use information that deceives in the hiring processes.

6. Clarify what will be the mechanism by which users will have the possibility to cancel their product.

In Mexico, when considering the use of crypto assets as a vulnerable activity, the Central Bank reserves the provision of money when amounts greater than approximately $ 2,500 USD are identified.

On the other hand, in Honduras the representatives of the National Bank and Insurance Commission indicated that there is an entity that can handle claims and the Commission resolves them. When a person issues a complaint about unregulated entities, for example, those of crypto assets, they are channeled to the Consumer Services Department that depends on the Ministry of Economic Development. However, they highlighted the need to have a digital platform that allows all user complaints to be captured, as well as their attention. The perspective of these regulators is that there must be a code of ethics and conduct in such a way that it does not harm those who make use of these platforms.

The representative of Chile, stressed that it is essential that digital platforms “comply with what they say.” Although it is currently true in the country there is still no Law that regulates these types of companies, the only option that users have is to establish a claim for the breached contract. Finally, in Curaçao, all transactions with crypto assets are prohibited. However, they recognize that crypto assets have international transactions and that makes it very complex for regulators.

Data Protection

Regarding the protection of user information, regulators agree that it is important to have knowledge about the origin of the information. In this sense, it is recognized that the information today is an intangible asset and has a very important value for financial services through the internet. Therefore, one of the most important concerns is knowing what is being done to protect user data on these platforms. They consider that they must have models that allow quantifying the risk that exists in the use of information.

At this point, knowledge of technology is important since certain blockchain protocols stand out for immutability and that may violate the right of users to have their data modified. While it is true today we already have blockchain platforms and architectures that allow this option to be flexible, in the end it is essential that regulators have knowledge about it and that they have a diversified knowledge since, often, it is thought that all Blockchain solutions are similar to the bitcoin protocol.


The majority of those present indicated that they are not yet clear on how it is that Fintech and cryptoactive companies are evaluating the risks on the services they offer. For this reason, they consider it necessary to specify the parameters that apply to quantify these risks. For example, the representative of Chile mentioned that there is a regulation on the fulfillment of the promise of the service, therefore, when an electronic transfer is made, banks are asked to have availability and immediacy. Although it is true, in countries such as Mexico, these criteria exist for Interbank Electronic Payment Systems (SPEI), not all countries are clear about crypto assets, so they considered it important that these last two criteria be quantified to have knowledge of its ability to respond to the emergence of contingencies.

Another risk they consider latent is knowing how to identify the resources of business owners. The concern focused on how to improve practices to prevent money laundering since in many cases there is no knowledge of the resources of those who undertake this type of project. In Chile, banks closed crypto exchange accounts arguing money laundering issues; however, the court forced the accounts to be opened again since the existence of money laundering could not be proven.

Approaches to regulation

One of the main complexities that regulators face is that there is no clear enough picture to know where Fintech products, including crypto assets, could fit into the laws of each country. While it is true today there are no universal standards in Fintech regulation, the Financial Conduct Authority establishes some criteria to establish a regulation, for example:

 Wait and see. It consists of the intervention of the regulator when a contingency is presented on such a platform.

 Short term license. A temporary permit is granted so that the platforms can test the product they offer for a certain period of time.

On this last point, they agree that temporary licenses must have a prior evaluation so that such temporality does not have an impact on flexibility within the legal framework. One of the outstanding participations was that of the Deputy General Director of Supervision of New Models, known as sandbox, in the National Banking and Securities Commission (CNBV) in Mexico, noted that many companies that seek to offer financial products using blockchain technology have thought of a type of temporary authorization under this new model figure.

In general, regulators agreed that authorizing a cryptoactive company or Fintech, is because there really is confidence that it can perform widely and in the end, it will be financially sustainable.


During the 3 days of activities, it was possible to generate an important discussion about the understanding of the cryptoactive industry; Likewise, some challenges were identified to consolidate a regulatory approach, among the most important were:

 The importance of having knowledge about the operation of technology so that supervision is widely known.

 Financial education, since they agree that Latin American countries still face financial information challenges at different levels of education.

 Ensure that platforms that operate with crypto assets are not only functional, but secure, since the record they had until a few months ago is that cryptoactive exchanges were hacked at least once a month.

In the case of Honduras, they indicated that it is important to set specific objectives to generate an alliance between the companies and the government of their country. In this regard, the fact that financial regulators have greater representation and can interact with other regulators in the country, for example, entities that protect users, chambers of commerce, to name a few, is mentioned. Likewise, they perceive an empowerment of Fintech in a way that allows them to be prepared for the requirements they may request. They have identified that most entrepreneurs in this sector come from other countries and are very active, requesting meetings every week. They even recognize that companies of this type and Fintech in general have expressed their preference for being regulated.


Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.

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