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Regulatory Requirements for Fintech in Paraguay: Crowdfunding and Lending Platforms

The fintech industry has been rapidly growing in Paraguay, with crowdfunding and lending platforms becoming increasingly popular. However, these activities are not yet fully regulated, leaving a regulatory gap that must be addressed to ensure the protection of investors and promoters.

Current Regulatory Framework

Crowdfunding, which involves the public solicitation of funds from a large number of individuals to finance a business or project, is currently excluded from the scope of Law No. 5810/17 on the Securities Market. However, the Superintendency of Securities (SV) is working with key industry players to draft a bill that would regulate crowdfunding activities.

Key Provisions of the Proposed Bill

Crowdfunding Platforms

  • Registration and Compliance: Crowdfunding platforms would be required to register with the SV and comply with regulations, including maintaining operational and technological risk mitigation procedures.
  • Activities Limitations: Platforms would not be allowed to engage in activities other than those expressly authorized by the SV, unless they have sufficient mechanisms and procedures in place to minimize conflicts of interest.
  • Investment Recommendations: Platforms would not be permitted to provide recommendations or personalized advice on investments facilitated through their platforms.

Registry of Crowdfunding Platforms

The bill establishes a Registry of Crowdfunding Platforms, which will be managed by the SV. This registry will provide transparency and accountability in the industry.

Regulatory Framework for Lending

The BCP regulates lending activities through Resolution No. 7/19, which includes individuals and legal entities that regularly provide monetary loans as subjects of Law No. 861/96 of “General Law of Banks, Financial Institutions, and Other Credit Entities” and its amending Law No. 5.787/16 of “Modernization and Strengthening of the Regulations Governing the Operation of the Paraguayan Financial System.”

Obligations for Lenders

  • Corporate Governance: Comply with corporate governance regulations
  • Complaints Management: Manage complaints and inquiries
  • Interest Rates Regulation: Regulate interest rates
  • Loan Contracts: Sign contracts for loan transactions

Impact of the Proposed Bill

If the proposed bill is passed, it would establish a clear regulatory framework for crowdfunding and lending platforms in Paraguay, providing protection for investors and promoters while promoting innovation in the fintech industry.

The bill would also transfer supervision from the BCP to the SV, allowing for more effective regulation of these activities. Additionally, the bill would establish a Registry of Crowdfunding Platforms, which would provide transparency and accountability in the industry.

In conclusion, the proposed bill is a significant step towards regulating crowdfunding and lending platforms in Paraguay. It provides protection for investors and promoters, while promoting innovation in the fintech industry. If passed, it would establish a clear regulatory framework for these activities, ensuring that they are conducted in a safe and transparent manner.