The main purpose of the Fintech Law is to regulate Financial Technology Institutions (“Fintechs”), as well as transactions with digital assets (cryptocurrencies) previously approved by Mexico’s Central Bank (Banco de México) (“Banxico”).

The Fintech Law regulates two types of Fintechs: (i) Collective Financing Institutions (Instituciones de Financiamiento Colectivo) (crowdfunding), and (ii) Electronic Payment Funds (Instituciones de Fondos de Pago Electrónico) (electronic wallets).).

(i) Collective Financing Institutions (crowdfunding): their purpose is to liaise applicants with investors, through computer applications, interfaces, Internet pages or any other means of electronic or digital communication, so that investors may finance applicants under the following schemes:

(ii)Electronic Payment Funds (electronic wallets): their purpose is the issuance, management, redemption and transmission of electronic payments, including those in Mexican currency, foreign currency or digital assets (cryptocurrencies), through computer applications, interfaces, Internet pages, or any other means of electronic or digital communication. Their main activities include, among others:

The Fintech Law defines digital assets (cryptocurrencies) as the representation of the electronically registered value used by the public as a means of payment for all types of legal transactions, and which transfer may only be made by electronic means.

Banxico must authorize the digital assets being used by Fintechs and other financial institutions. For the determination of digital assets, Banxico will consider, among other aspects, the use that the public may give to digital units as a means of exchange, the treatment that other countries give to particular digital units as digital assets, as well as the agreements, mechanisms, rules or protocols that will allow to generate, identify, fraction and control the replication of said units.

Additionally, Banxico will define, in implementing legislation, the features of digital assets, as well as the terms, conditions and restrictions of transactions and other relevant actions.

Finally, Fintechs operating with digital assets must disclose to their customers the inherent risks of digital assets, including the fact that a digital asset is not a currency of legal tender and is backed up neither by the federal government nor by Banxico.

The Fintech Law defines “Innovative Models” as those that use technological means or tools for providing financial services, with features other than those existing in the market at the time a temporary approval is granted.

To implement activities through innovative models that require an approval, registration or concession, Mexican business entities other than Fintechs, financial entities and other supervised or regulated entities must obtain a temporary approval.

Said temporary approval will be valid taking into account the services that are to be provided, but may not exceed two years, with the possibility of renewal for up to one additional year.

Fintechs will be overseen and supervised by Banxico, the National Banking and Securities Commission (“CNBV”), and an Interinstitutional Committee, formed designated by officials of Banxico, the Treasury Department (“SHCP”) and CNBV.

The various government agencies in charge of overseeing and regulating Fintechs must issue implementing regulations within the following two years, as follows:

(a) Banxico:

(b) SHCP:

(c) CNBV:

(d) National Commission for the Protection and Defense of Financial Services Users (Comisión Nacional para la Protección y Defensa de los Usuarios de Servicios Financieros) (“Condusef”): twelve months for rules on reports to be submitted by Fintechs to Condusef, and rules for innovative models to be regulated by Condusef.

(e) National Retirement Funds Savings System Commission (Comisión Nacional del Sistema de Ahorro para el Retiro) (“Consar”): twelve months for rules on reports to be submitted by the Fitechs to Consar.

(f)National Insurance and Bonding Commission (Comisión Nacional de Seguros y Fianzas) (“CNSF”): twelve months for rules on reports to be submitted by Fintechs to CNSF.

Finally, entities currently operating as Fintechs will have a twelve-month term to comply with the provisions of the Fintech Law, and obtain the necessary approvals to continue operating.