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With this, it has become the first Latin American fintech to receive a Distributed Ledger Technology Regulatory Framework license.
“This license gives Bitso a leading position as one of the most innovative financial services providers in Latin America and the world, by becoming the first exchange platform in Latin America licensed and regulated by the GFSC,” said a company announcement.
What are the implications?
As a result, the GFSC will oversee all of Bitso’s crypto purchases, shipments, withdrawals and trading beginning August 1.
“It has been a fairly long road but we are excited that we are the first cryptocurrency platform in Latin America to be regulated,” said Pablo Gonzalez, Co-founder and Chief Design Officer of Bitso.
“We are the sixth under this regulatory framework in Gibraltar, which is really the world’s most advanced cryptocurrency framework. It’s like if you’re a chef who makes sushi and want to get certified, then you’d go to Japan.”
Based on reports, Bitso wanted to obtain a Distributed Ledger Technology Regulatory Framework since its specifically designed for blockchain businesses. Likewise, it guarantees users protection as well as security.
Over 600,000 users on the Bitso platform will see improved certainty, security and transparency due to this GFSC regulation. Moreover, it will permit the Mexican fintech to expand internationally, according to Bitso Product Manager, Eduardo Arenas.
Following this, Bitso also plans to divide itself into two entities operating under the same brand name. One part will exclusively dedicate itself to cryptocurrency operations in Gibraltar as well as one in Mexico.
“Basically, when users interact with Mexican pesos, use SPEI or with their Bitso Transfer account with pesos, the Mexican authority will be regulating it,” said Arenas. “When carrying out operations with cryptocurrencies, that activity will be carried out with the Gibraltar entity and will be regulated by the authority of that country.”
Gibraltar, the oasis for fintech
The tiny enclave of the United Kingdom in Southern Spain has a positive reputation for its financial regulations. This regulatory framework, also known as distributed accounting registration technology, arrived in Gibraltar in 2018.
On top of the framework are also nine core principles (not rules) that fintechs ought to follow to earn this licence.
“We believe that regulatory results remain central but best achieved through the application of principles rather than rigid rules,” according to the GFSC website. “This is because, for companies based on rapidly evolving technologies, rigid rules can quickly become obsolete and unfit for their purpose.”
These values include honesty and integrity, attention and transparency, strong risk management, effective maintenance of financial resources, customer services, efficient corporate government measures, high-security systems, protocols against money laundering and terrorist financing, as well as contingency plans for liquidation and business solvency.
How does this relate to Mexico’s Fintech Law?
Bitso began in 2014 as Latin America’s first cryptocurrency exchange determined to connect Mexico with the international financial system. Under Mexico’s Fintech Law, Bitso is still in the process of becoming a certified financial technology institution in the country.
According to Bitso’s leadership, this new license won’t interfere with the company’s pursuits in Mexico. National Banking and Securities Commission (CNBV) is also aware of the development.
All the while, Mexican authorities are currently establishing new guidelines for fintech startups to operate in the country. Fintechs have until September 25 to request authorization from the CNBV to continue operations.