Fintech Summit 2024: "The flow of capital into the country is positive", stated the president of the Uruguayan Chamber of Fintech.

In a context of stimulating growth and with discussions about state regulation adapting to current times, the Fintech Summit 2024 was held with the support of Uruguay XXI. There, Rodrigo Tumaián, president and co-founder of the Uruguayan Chamber of Fintech, highlighted a favorable environment for this type of enterprise.

With success stories such as Bankingly, Ripio, Astropay, Prometeo API, and DLocal, the ecosystem is growing at a steady pace. According to 2023 data, there are around 60 active fintech companies in Uruguay, which is significant given the country’s size. The stability and reputation that Uruguay offers as a financial platform in the region have facilitated its consolidation as a regional hub for the fintech sector. This ecosystem is supported by a long-standing tradition of financial services and by the synergy between local and international companies, which develop innovative solutions within a framework of strong legal security and economic stability. In addition, the country has a solid base of skilled talent in the areas of ICT and financial services, allowing fintech companies to achieve a notable level of maturity in the regional context.

“In relation to population size, Uruguay has a large number of startups”, said Tumaián, who is also the director of Prometeo API and has been working to promote the sector for a decade.

“We have a strong presence in international investment forums”, he said, revealing as an example that at a recent Bank of America event, there were three Uruguayan companies alongside six from Brazil and six from Mexico.

It’s more than just a matter of numbers; it’s also about prestige. “On trips abroad, I always find there is positive recognition for some Uruguayan company and the talent behind it”, he said.

According to Tumaián, this is the result of a legacy built by the software industry. “Today, we in fintech are reaping the benefits, because it’s no longer a country that others don’t know about”, he observed.

Regarding the future of investment in fintech, the outlook from the chamber is also optimistic. “The flow of capital into Uruguay is positive, with more than $41 million invested so far this year”, he explained, adding that they expect this trend to continue as global interest rates decrease.

Compared to many other technology companies, fintechs are based on a paradigm shift: instead of offering a service, they offer a product. This, in turn, changes the location of intellectual property, which originates in the country rather than abroad. From this perspective, Tumaián highlighted that in his field, these are products with great potential for global scalability, as has been the case with Astropay, the Uruguayan electronic payments company.

Additionally, Uruguay's recent entry into the Patent Cooperation Treaty (PCT) strengthens the country's position as an attractive destination for investors and entrepreneurs in life sciences and knowledge-based services. This treaty expands opportunities for international collaboration and supports intellectual property protection for innovations developed in Uruguay.

Regarding professional training, he spoke highly of the work done by the University of the Republic and private educational institutions such as ORT University and the Catholic University of Uruguay. He added that, as an advantage for the growth and strengthening of startups, the country has institutional funds, such as those from the National Research and Innovation Agency (ANII), the National Development Agency (ANDE), and the newly launched government program Uruguay Innovation Hub. “These are very powerful instruments”, he said.

Uruguay also offers incentives for the IT and fintech industries, including tax benefits through the software decree. These incentives are key to attracting international companies and fostering new ventures. Such incentives are complemented by the country’s strong infrastructure, which includes high-quality connectivity, such as 5G networks and adequate bandwidth for the development of technology businesses.

New regulation on virtual assets offers legal security and supports the development of fintech in Uruguay

Uruguay is advancing as a regional fintech hub, supported by regulation that is highly adaptable to change. This was highlighted by several speakers at the Fintech Summit 2024, who added that innovation in the sector requires a legal framework that fosters its development and provides legal certainty. In this context, the virtual asset regulation law was a central topic throughout many of the conference sessions.

The regulation, approved by the Uruguayan Parliament in September, recognizes virtual assets and includes virtual asset service providers (VASPs) under the regulatory and supervisory umbrella of the Central Bank of Uruguay (BCU).

In this context, both Patricia Tudisco, Superintendent of Financial Regulation at the Central Bank of Uruguay, and Matías Langevin, partner at the Chilean law firm HD, agreed on the importance of regulation to protect the stability of the financial system and mitigate risks.

During the conference “The Path to Open Finance,” it was noted that although open banking is a growing reality with or without regulation, a legal framework is essential to provide guarantees to users and foster trust in the system. This panel included Ximena Alemán, CEO of Prometeo API, Washington Ribeiro, President of the Central Bank of Uruguay, and Salvador Ferrer, Chairman of the Board of Banco República del Uruguay (BROU).

The legislation introduces recognition of so-called "virtual asset securities" (defined as “a digital representation of value or contractual rights that can be stored, transferred, and traded electronically through distributed ledger technology (DLT) or similar technologies”). A specific regulatory framework is thus created for these assets within the securities market, and service providers related to the financial system are incorporated.

By being integrated into the financial system and under the supervision of the Central Bank, these providers are subject to mechanisms for controlling money laundering and financing of terrorism. Security, transparency, and stability are the foundational principles this regulation aims to ensure.

Cryptocurrencies are not considered virtual assets; they are recognized as “cryptographic tokens” specifically designed to serve the functions of money and act as payment methods. Despite the challenges, there is optimism within the Uruguayan crypto industry for future, more specific regulations that will allow the market to develop responsibly, benefiting both users and the financial system. The synergy between the industry, users, and the financial system is therefore increasing.