The FinTech bill presents the Chilean financial sector with new challenges

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Important facts:
  • The bill was resumed after it was stopped by protests last October.

  • The FinTech sector is asking the government not to repeat the mistakes of other countries.

The Chilean government reported on April 13 that the FinTech bill will be presented to Congress in the middle of this year. This news celebrates the financial finance sector and sees regulation as an opportunity and an incentive to guarantee this growth, especially today when the crisis caused by the coronavirus pandemic is forcing the world to turn to the digital ecosystem to change society and continue to generate income to generate.

A year ago, the Chilean financial market commission asked the players in the FinTech industry in the country to create a work table with the aim prepare a draft law regulating the sector.

After a few months, the work started was paralyzed by the social outbreak that had plunged the Chilean population into uncertainty and confusion for several months since October 2019.

Mauricio Benítez, director of corporate development at BDO Chile. Picture from bdo.cl.

“We have been on hold since then until the government announced that the project would be coming to Congress in a very short time in the middle of the year,” Mauricio Benítez, director of corporate development at BDO Chile, told CriptoNoticias.

FinteChile, the association that brings together 70 of the 130 FinTech companies in the country together with BDO Chile, has worked to promote the development of the industry and control the processes that enable companies to regulate themselves and better deal with those circumvent the legal framework.

We look forward to seeing how the bill will come. Above all, however, we think regulation is an opportunity at the moment, especially because traditional banking can recognize in complex moments, as we experience it, that it has to work with financial technology companies. Also that there has to be an integration between FinTech and traditional banking. We must not forget that the 2008-2009 financial crisis spawned the FinTech industry, which was presented as a solution to the world. For this reason and for other reasons, we see today more than ever that FinTechs in Chile must be a relevant sector in the financial sector.

Mauricio Benítez, Director of Business Development BDO Chile.

Challenges and opportunities

Ángel Sierra, managing director of the FinteChile Association, told local media that FinTech must be officially recognized as a financial service provider Supporting government and society in such complex situations as today for the aftermath of the pandemic.

Mauricio Benítez agrees with this idea and believes it is time to develop or die as the world is committed to promoting digital, remote services, artificial intelligence and cryptocurrencies.

We have to take into account that 10 years ago we continued to develop the financial technology industry and that solutions already exist that actually make things easier for companies and thus provide access to finance and leverage for future projects. For this reason, we believe that this moment represents an opportunity to be the solution required by companies that will not do very well due to the crisis, as there are many companies that will fail and fail. All central banks are injecting capital into the markets because of a lack of liquidity, but we also have to consider that we have technological solutions that are such an effective tool that the production costs of many industries will decrease. We can use the technology and take advantage of it to give the economy a boost.

Mauricio Benítez, Director of Business Development BDO Chile.

On the other hand, Ángel Sierra said that the FinTech union in Chile is waiting for three elements. First, they hope that the law will be implemented with urgency and speed so that Chile can benefit as soon as possible from the democratization of finance through the use of technology.

Second, they strive to do that The Chilean government is not repeating the mistakes other countries have made in implementing their policies in FinTech, which ultimately led to a restrictive regulation that inhibited innovations in the financial sector.

Third, they want the government to visualize that FinTech is the catalyst for Chile to become the region’s financial center.

“Today, the world’s major financial centers are not necessarily those with the greatest depth in their capital markets, but those who have put technology at the service of people and their economy in general,” he said, the La Tercera newspaper reports.

The director of the FinteChile Association is convinced that the effects of the spread of the corona virus in Chile could benefit cryptocurrencies such as Bitcoin and FinTech services in payment processing, as recently published by CryptoNews.

“At the moment, crypto assets are surprising with their resilience to traditional currencies for one simple reason. They are technologically protected and have a limited number. Bitcoin has 21 million (units) and ends there. Unlike the dollar and other currencies that are a banknote printer, the underlying currency that supports those currencies is no longer known, “Sierra said.

Although the fintech industry has expectations of integration into traditional banking, there is a story in Chile where banking has restricted business from Startups related to cryptocurrencies.

One of the most recent cases occurred last January when the Banco de Crédito e Inversiones (BCI) closed the accounts of the Bitcoin buying and selling platform ChileBit. Previously, the most emblematic cases occurred in March 2018, when local banks closed the accounts of the stock exchanges CryptoMKT and Buda.com.

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