New Strict Fintech Regulations Halted in Brazil

New Strict Fintech Regulations Halted in Brazil

The central bank of Brazil is planning to cut short, for a time being, the implementation of vigorous regulations for the local booming fintech industry, Reuters reported.

The first of many consequences of this decision has been the withdrawal of a proposed regulatory draft made by the Banco Central do Brasil, that was supposed to be put into action by the National Monetary Council (CMN).

Currently, no reason has been revealed for the unexpected curb.

On November 18th the central bank pushed for a discussion on the impeded regulations, which will most probably occur during the next meetings organized by the CMN. Yet, there is no guarantee that the officials will reach a consent.

Public consultations were held all the way back in 2019, when the CMN and local authorities initially tackled the growing complaints by big banks that fintech firms were lightly regulated.

The suspended regulations are yet to be voted on. Their main goal is to achieve a state of equilibrium between the local banks and the growing number of financial technology companies. Crucially, the proposed legislation would increase the minimum capital requirements for all fintech companies according to size, asset gains, and total transaction volume.

Reuters quoted three sources of interest that help with lessening the ambiguity of the news. The first two report that the bank and others involved are still planning to integrate the rules, but no date has been given. While the third source asserts that the central bank wishes to make appropriate adjustments to the bill so as to avoid burdening the fintech industry.

It is argued by many that the looser regulations – the central bank had not made any regulatory reforms in ten years – are what birthed the fintech industry in Brazil, which is currently in its heyday. What’s more, is that local authorities will actually continue to encourage fintech firms, new and settled ones, as they greatly propel Brazil’s financial systems.

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