Although perhaps not one of the most recognized, Paraguay has its own ecosystem of companies dedicated to financial technology. As of 2017, the Paraguayan Chamber of Fintech was created to unify them and to date continues its efforts to highlight these startups at the international level.
One of its latest initiatives is to carry out a detailed study on the panorama of the Fintech sector in the country, with a view to subsequently creating an appropriate regulatory system. This research will be carried out jointly with the Paraguayan-German University (UPA) and the Center for Alternative Finance of the University of Cambridge.
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The project was in the Chamber’s attention since its creation
Cinthia Facciuto, president of the Paraguayan Chamber of Fintech, commented about the study: “This will give us a starting point to make the sector known nationally and internationally. It will also give us an important input for strengthening the sector in general and for the development of an effective regulatory framework for the activities of Fintech companies in the country (…) We are in constant conversation with the Central Bank of Paraguay (BCP) and the National Securities Commission (CNV), with whom we want to collaborate more closely each time.”
This project has been on the table ever since the Chamber was founded, but so far it seems that it will crystallize. From an initial dozen startups, this organization has grown to 29 members who operate in payment methods, identification, loans, consulting, financial infrastructure, and, of course, cryptocurrencies and blockchains.
The lack of regulation in Paraguay could constitute a real problem for fintech startups
One of these startups is Cripex, which operates with buying and selling, remittances, and cryptocurrency mining. Since in Paraguay there is no specific regulation on these assets, this company decided to self-regulate from the outset, “acting de facto as regulated entities before the Secretariat for the Prevention of Money Laundering (SEPRELAD).”
With respect to this lack of regulation, Facciuto explained in a previous report that it could constitute a real problem for fintech startups:
“Technology goes faster than the law. And this is a real problem because we have companies that have been constituted for 8 years and cannot operate or have many limitations to do so due to the lack of specific regulation.”
In turn, Gustavo Villate, vice president of the House, shared that opinion and showed the first steps to those who point with a formal request for regulation:
“From the Chamber, we want to push PSD2 regulations so that banks open their APIs and give access to certain data to Fintech companies. This will be beneficial for everyone. Another factor that limits the growth of Fintech solutions in Paraguay is connectivity. We are among the most backward countries in terms of quality/price.”
However, the first step is the study they intend to develop as a “Fintech map” of Paraguay. That way, they will be able to better understand the needs of the sector in order to present a coherent proposal to the authorities.
According to a report on Alternative Finance in the Americas and the Caribbean, carried out by the Center for Alternative Finance at Cambridge University, the Inter-American Development Bank (IDB) has been working since 2017 with several countries, including Paraguay, to create a regulatory framework for the fintech sector. So far, however, only Mexico seems to have made progress on this initiative.
Earlier this year, several fintech company representatives met with relevant authorities to determine how fintech and cryptocurrency activities should comply with national anti-money laundering laws. Beyond this, however, a specific regulatory framework is still uncertain, although the first steps are being taken to achieve this.
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