Crowdfunding before the Fintech Law Enforcement

Contemporary economies essentially base their growth and, in fact, the viability of their own functioning on the availability and access to credit under reasonable conditions, which, in accordance with new technologies, have created a new context by virtue of which the markets are in changing way, creating a collective and communitarian tendency of diverse actions towards the financial disintermediation that have given guide as alternative means to form a series of alternate processes in which the financings are made.

Parallel to the foregoing, in view of this need for non-dependence on brokerage, it created a series of new financing channels, which, in the shape of the social environment, gave rise to what is called crowdfunding.

Crowdfunding, by conceiving various factors that are social and technological that, at the same time as the economic one, have created social communities that, by taking advantage of them collectively, have been reflected in numerous initiatives for artistic and cultural creation, distribution, use and collective exploitation.

In this order of ideas, crowdfunding or mass or collective financing, describes a wide and varied phenomenon consisting of the creation of an (electronic) environment for the grouping of a collective, the contribution of ideas, resources and funds and the interaction in network aimed at jointly supporting projects, efforts and initiatives of individuals, organizations or companies.

In March 2018, the Law to Regulate Financial Technology Institutions (FINTECH Law) was published in our country, which regulates this and several figures in a legal framework that aims to regulate its organization, operation and functioning through innovative means. For various circumstances in which they stand out:

 

• Due to the emergence of technological innovations and business models that do not have regulation and supervision by the authorities on the operations they carry out with their clients, which makes it necessary to include them within the regulated and supervised sector of the financial system.
• Provide a regulatory space for innovation through technology and financial services to be developed, putting at the forefront the development of financial services that are capable of increasing the level of financial inclusion and improving the conditions of economic competition in the national financial system.
• Establish a general framework of authorization and supervised operation of the Financial Technology Institutions (FTI), imposing prudential rules proportional to the risks they represent in different areas, such as financial, operational, in order to avoid regulatory inequality with other financial sectors, looking for a healthy and balanced competition.

 

In another order of ideas, we can mention the explanatory statement of the FINTECH Law, which is based on the idea that collective financing institutions (crowdfunding) are those platforms that are responsible for giving access to new sources of financing for segments of the population that is not normally served by traditional financial entities, contained under three assumptions:

The collective debt financing institutions are those where the institution puts in direct contact with investors with applicant who require financing, who will subsequently return the resources, usually with the payment of an interest.

The institutions of collective financing of capital are those that facilitate that the investors contribute resources, through the institution to obtain participations in the social capital of the requesting legal entities that are promoted by this method to later be partakers of the profits of said legal entities.

Finally, collective financing institutions of co-ownership and royalties are those where investors contribute resources to a project by obtaining a share in a property or right.

 

 In this scenario, the FINTECH Law, as in Article 4, it is clear that the framework for applying its content to the following bodies or legal entities is clarified:

 

• In a first block given its constitution: to Financial Institutions, holding and sub-holding companies of financial groups, credit institutions, brokerage firms, stock exchanges, investment fund management companies, stock distribution companies from investment companies, credit unions, auxiliary credit organizations, foreign exchange bureaus, multiple purpose financial institutions, financial cooperative associations, community financial companies with levels of operations I to IV, rural financial integration corporations, cooperative savings and loans association with operating levels I to IV, institutions for securities depositories, central counterparties, financial markets and risk-rating agencies, credit information agencies, insurance institutions, bonding companies, mutual insurance companies, retirement funds administrators, as well as other institutions and public trusts who carry out activities with regard to the CNBV (Mexican National Banking and Securities), the CNSF (National Bonds and Securities Commission) or the CONSAR exercise supervisory powers.
• To the Business Groups, to the group of legal entities organized under schemes of direct or indirect participation of the social capital, in which the same company maintains the Control of said legal entities, including the financial groups constituted according to the Law Regulating Financial groups.
• To the financial technology institutions regulated in this Law, which are the collective financing institutions and the electronic payment funds institutions.

 

Under this manner, the legislator to the creation of the FINTECH Law contemplated various sanctions for the protection of the FTI customers, of the companies authorized to operate with models derived from new technologies in which resources or similar are operated or having been unauthorized some Institution for some assumption of the law continue in operations, fixing the following:

ADMINISTRATIVE SANCTIONS. Contained in articles 96, 97, 103, 104, 105, 109, and 110.

Finally, it can be noted that technology has taken various existing phenomena to unknown scenarios that add value, represent new challenges and force us to reconsider our principles, our rules and our conception of the model of social coexistence. Crowdfunding was born as a response to an opportune context of difficult and limited access to financing, but it has become an exciting question about how we can and how we want to rethink our economic system. Where Mexican government has rightly legislated for a better understanding creating different standards which are the beginning of an economic and financial transformation in emerging markets, which are explored every day through platforms that are being transformed, this being the challenge of the FINTECH Law that should not be delayed by the constant evolution in the behavior of collective social trends in the economic field.