![]() "financial," and the term "tech" comes from the word "technology." Fintechs are small structured financial companies, mostly startups, which provide credit and other financial services, such as financing of final users' assets and crowd funding. Their services operate through electronic platforms, such as mobile apps or websites. According to Pricewaterhouse Coopers (PWC) research published in 2018, beginning their operations and only 12 million gross revenue in 2017 (approx. USD $2.7 million). In the research, the fintechs' managers have reported difficulty capturing investments for the institutions. According to a report from KPMG, Brazil leads the fintechs' investments in Latin America, increasing from $134 million invested during 2017 to $257 million invested through the third quarter of 2018. Ian Pollari, global co-leader of fintech from KPMG International, says, "Geographically, we are seeing more activity and bigger deals in less traditional markets like Brazil, Japan and South Korea." (CMN) No. 4.656, dated April 26, 2018, has regulated fintechs' activities, segregating these companies in (i) SCDs, which provide credit to customers directly through the fintech's electronic platform; and (ii) SEPs, peer-to-peer intermediary companies, whose electronic platform facilitates credit transactions between lenders and borrowers. In addition, Brazilian fintechs provide other financial services, such as payment cards. Also, according to Ernst & Young, "Brazil is notable for evolution of its online budgeting and financial planning services ... ." further regulated the issue through Circular No. 3.898, dated May 17, 2018. Fintechs' activities are not exclusive to financial institutions. Any entity or individual can form such corporations, provided they comply with regulations activities cannot be confused with a bank's, since the fintechs do not collect funds from the general public. Due to the expressive development in Brazil of fintechs and payment arrangements, Brazilian government has recently allowed the foreign investors to hold 100 percent equity in local fintechs without the need to apply for the presidential authorization decree, applicable to traditional financial institutions. According to article 52 of the Brazilian Transitory Constitutional Disposals (ADCT) and article 192 of the Federal Constitution (CF), foreign investments in financial institutions are allowed if national interest matter is concerned and any such foreign investment needs a presidential authorization decree. Decree No. 9.544, dated October 29, 2018 (Decree), allowed 100 percent foreign investments in fintechs on the grounds that such investments are in the best interests of the government. According to the Decree, BACEN is responsible to issue rules and other specific conditions to define how the investments shall be made in Brazilian fintechs. Foreign investments are necessary to most Brazilian companies, especially to fintechs whose core business is directly associated with technology. The Decree will enable state-of-the-art systems to be aggregated to Brazilian fintechs more efficiently. Brazilian fintechs will technologically be on the same level as their foreign duva Advogados, where he leads the electronic payments department. He also teaches contract law in the post-graduation program of Fundação Getúlio Vargas FGVLaw. Barcellos Tucunduva Advogados, where his practice areas are electronic payments and commercial law. Av. Juscelino Kubitschek, 1726, 4º andar São Paulo, Brazil 04543-000 lattie@btlaw.com.br btlaw.com.br |