Chile’s Fintech Companies Face Compliance Challenges Amid Regulatory Framework Changes

Santiago, Chile - As Chile’s fintech ecosystem continues to grow, with 176 financial services startups operating in the country, the government has introduced a new regulatory framework aimed at defining parameters for financial technology companies. The “Fintech Law”, which reached the Lower House of Congress in September, is expected to bring about significant changes to the way fintechs operate.

Key Changes under the Proposed Law

Companies and entities interested in offering payment services, credit, investment advisory services, or custody of financial instruments must request inclusion in the Comisión del Mercado Financiero (CMF) Service Provider Registry.
The CMF will have 30 working days to respond to these requests, and if approved, the entity’s registration must occur within three days.
Fintechs will be limited to offering only those services outlined in the law, without being able to offer other products or services outside of its scope.

Concerns among Experts and Entrepreneurs

The mandatory registration process may discourage fintechs from entering the market.
Companies that fall under the activities regulated by the CMF may face limitations on their ability to innovate and offer new products or services.

Increased Capital Requirements

Fintechs working with custody and intermediation of financial instruments will be required to have a net worth of UF 5,000 (approximately $193,000) or the equivalent of 3% to 6% of a reference equity yet to be defined by the CMF.
This is an increase from the current minimum requirement of UF 10,000.

Impact on Innovation and Competition

Cristián Reyes, a lawyer at Aninat Abogados and advisor to FinteChile, believes that while the law aims to have low barriers to entry for new competitors, certain provisions may contradict this principle.
“The fact that companies must not only register with the CMF but also have its authorization to operate, which can take up to six months and be subject to criteria of the authority on duty, can be a discouragement to enter the market,” he said.

Open Banking and Stablecoins

Article 16 of the Fintech Law introduces the bases for open banking in Chile, bringing together institutions such as banks, issuers, payment institutions, and payment initiators.
The law also modifies an organic law that deals with the regulatory powers of the monetary authority, extending these powers to stablecoins (cryptocurrencies of more stable value).

Future Outlook

The proposed law is still under discussion, and it remains to be seen how fintechs will adapt to these changes.
However, one thing is clear: Chile’s fintech ecosystem is poised for significant growth and innovation in the coming years.