Latin America’s Fintech Boom Fueled by Strong Regulation
Latin America’s fintech sector is booming, with a 340% growth in startups over the past six years. This surge is driven by strong regulation and dynamic regulators, supporting innovation in areas like financial inclusion and instant payments. The region’s central banks also played a key role during the Covid-19 pandemic, implementing measures that avoided the inflationary pressures seen in other countries.
Brazil Leads the Charge
Brazil stands out as a regional leader. Nubank, a digital bank, became the country’s largest private bank in January, boasting over 112 million users. The instant payment system Pix has transformed transactions, accounting for more than half of all payments in Brazil, with 170 million users and an adoption rate of 80% to 95% across the country. This widespread use shows Pix’s role in transforming Brazil’s digital payment environment.
Eduardo de Los Heros, legal manager at Bitso, a Mexican cryptocurrency trading service, highlights Brazil’s advanced digital payment regulations. He notes that while creative laws can be beneficial, they aren’t always effective. Brazil’s success, however, is undeniable, with its regulations supporting the growth of fintech giants like Nubank. Additionally, Brazil, along with Mexico and El Salvador, is recognized as a regional pillar in legislative development for fintech, particularly through innovative payment mechanisms like Pix.
Mexico’s Fintech 2.0 Law
Mexico is another key player, with over 1,000 fintech companies, second only to Brazil in the region. The upcoming Fintech 2.0 Law has the objective to develop open finance as well as public access to user data of Mexican financial projects, creating clear regulations for virtual actors, tokenization, and stable coins. This law is part of Mexico’s broader strategy to support a digitally-driven financial ecosystem, as emphasized by CNBV President Ángel Cabrera at the Fintech Festival 2026.
De Los Heros explains that this law will establish a framework for the rapidly expanding fintech industry, which has outpaced the regulatory capabilities of the Comisión Nacional Bancaria y de Valores (CNBV). While the law is not expected to be ready this year, CNBV President Ángel Cabrera has expressed confidence in Mexico’s technological readiness for Fintech 2.0, envisioning an ecosystem where digital entities generate value in cash-dominated areas.
However, the lack of a publicly available draft or bill before Congress raises questions about the timeline and specifics of its implementation. Despite this, Mexico’s fintech market continues to mature, with digital banks and payment schemes gaining traction and challenging traditional banks to innovate.
Regulatory Innovations Across Latin America
El Salvador stands out for its dynamic approach to fintech regulation. With a single regulator, the National Commission of Digital Assets (CNAD), working alongside the Central Bank of El Salvador, the country focuses on neutral laws. CNAD regulates activities like crypto without tying legislation to specific technologies. This broad scope allows for quicker adoption and avoids delays in achieving regulatory consensus on specific models, such as blockchain, enabling more effective regulation of distributed technologies.
Colombia launched its instant payment system, Bre-B, in October 2022. By August, it had recorded 1.51 billion transactions and more than 35 million users; 171 financial institutions had integrated by then. However, Daniel Leiva, partner at Torres Legal in El Salvador, believes the numbers could have been better if the Banco de la República had been less passive and restrictive in recent years. Despite this, Bre-B represents a significant step toward modernizing Colombia’s payment infrastructure.
Challenges and Future Outlook
Colombia’s fintech sector is at a crossroads, with rapid uptake butting up against a new regulatory framework, where fintechs now have to adhere to the same standards as traditional banks, including rigorous know-your-customer protocols. De Los Heros questions whether excessive regulation is ideal for financial services users but acknowledges its potential benefits in protecting users in regions with limited banking options. This balance between innovation and regulation remains a key challenge for Colombia’s fintech growth.
Peru’s attempts to integrate banks, fintechs, and users on a single inter-platform payment system under one legislative umbrella are also attracting attention. The Andean nation has “a high index of unbanked people,” de Los Heros said, and in theory, having a unified system with a single platform could speed mass adoption. “We have to see how an interactive interbanking and inter-platform payment system could be adopted region-wise. It’s more important to have an interbanking system that works than an inter-platform system that is not adopted.”
