In the global race to modernize financial systems, Latin America is no longer a spectator. With Mexico’s Fintech Law 2.0 and Brazil’s Open Finance Initiative, the region is pioneering regulatory frameworks that marry innovation with accountability. These policies will serve as blueprints for how emerging markets can foster inclusive growth while safeguarding stability. Drawing on the latest reforms, this blog explores how LatAm is rewriting the rules of finance.

Ethics Meets Innovation

Mexico’s 2025 amendments to its Fintech Law mark a watershed moment for AI regulation in emerging markets. Inspired by the EU’s risk-based approach, the law categorizes AI systems into four tiers—from minimal to prohibited risk—ensuring high-stakes applications, like credit scoring, undergo rigorous bias audits. Lenders, for instance, must now provide Spanish-language explanations for algorithmic rejections, a critical step for transparency in a region where 40% of loans go to informal workers.

Brazil, meanwhile, has embedded “explainable AI” principles into its Open Finance framework. The Central Bank mandates that fraud-detection algorithms used by financial institutions must avoid disproportionately flagging marginalized groups, such as gig workers and rural entrepreneurs. These rules reflect a broader trend within Latin America: ethical AI utilized not as a luxury, but as a tool to bridge systemic gaps.

Stability Over Speculation

Mexico’s approach to crypto regulation prioritizes stability over sensationalism. Under Fintech Law 2.0, peso-pegged stablecoins must hold 100% reserves in government bills or central bank deposits, a direct response to the 2022 collapse of algorithmic stablecoins like Terra’s UST. This safeguards users from volatility while enabling practical use cases—imagine a Mexican exporter settling cross-border invoices in USDC without peso fluctuations.

Brazil’s Central Bank has taken a parallel path, integrating crypto into its real-time payment system, PIX. While still evolving, plans to allow BRL-to-USDC conversions could slash remittance costs for the country’s 4 million overseas workers. By tethering crypto to regulated financial infrastructure, both countries are mitigating risks while unlocking the efficiency gains of blockchain.

Breaking Down Walls

Brazil’s Open Finance Initiative is redefining how financial data is shared. Banks, fintechs, and payment providers must now expose product details and transactional data via secure APIs—with customer consent revocable at any time. This shift has democratized access to credit: a small business in São Paulo can apply for a loan using transaction histories from multiple banks, bypassing traditional collateral requirements.

Mexico’s Fintech Law 2.0 complements this with Llave MX, a national digital ID system. Users approve data sharing across 300+ services—from loans to insurance—via a single dashboard. For a freelancer in Guadalajara, this means seamlessly sharing tax records with lenders without compromising security.

Digital ID

At the core of Mexico’s reforms is Llave MX, a digital identity platform that simplifies onboarding for financial services. By linking verified identities to Open Finance APIs, the system reduces fraud while empowering users to control their data. Brazil’s Open Finance ecosystem relies on similar principles, ensuring consent is tied to authenticated identities.

These systems aren’t standalone. Colombia’s Firma Digital and Argentina’s Mi Argentina are adopting similar models, hinting at a future in which a unified LatAm digital ID could streamline cross-border commerce.

Regulatory Sandboxes

Mexico’s upgraded sandbox program accelerates fintech innovation by allowing startups to test products across multiple countries. For example, a Mexican insurtech company can participate in the program to trial its flood insurance product—designed to automatically pay claims when sensors detect rising water levels—in Brazil’s Amazon region, where flooding is frequent. If the product succeeds there, the company can then launch it in Central America without restarting lengthy regulatory tests in each country. By streamlining cross-border testing, the sandbox helps startups refine products once, reduce costs, and ensure reliability across diverse markets.

Brazil’s Open Finance Initiative relies on collaboration to balance innovation and stability. Technical Groups—composed of academics, fintech founders, and industry experts—design standards for APIs, security, and interoperability. The Central Bank oversees this process, retaining veto power to prevent anti-competitive practices. What these groups do is ensure that smaller fintechs can compete with banks by standardizing data-sharing protocols. This framework allows startups to build services such as instant payment integrations or credit-scoring tools that work seamlessly across Brazil’s financial ecosystem—all while adhering to strict consumer protection rules.

Navigating Complexity

LatAm’s progress isn’t without hurdles. Mexico’s state-level initiatives, like Nuevo León’s blockchain incentives, sometimes clash with federal rules, creating compliance headaches. Brazil’s Central Bank, while a leader in AI oversight, faces resource gaps in auditing complex models—a challenge mirrored across smaller markets like Bolivia.

But these hurdles, while frustrating, are surmountable. Mexico’s RENIAI Registry and Brazil’s Open Finance Deliberative Council demonstrate how public-private collaboration can align innovation with accountability.

A Blueprint for the World

Mexico and Brazil are proving that emerging markets can lead—not follow—in fintech regulation. By prioritizing transparency (e.g. RENIAI’s AI audits), inclusivity (Brazil’s Open Finance APIs), and stability (Mexico’s 100% stablecoin reserves), Latin America offers a roadmap for regions seeking to modernize without sacrificing security.

For global businesses, the message is clear: Latin America’s regulatory leap isn’t just about rules—it’s about reimagining how finance can drive equitable growth. Take alfred as proof: our infrastructure unifies fragmented fiat systems and stablecoin rails across the region, turning regulatory frameworks like Mexico’s Fintech Law 2.0 and Brazil’s Open Finance Initiative into tools that help businesses move money faster, cheaper, and more transparently. As the world watches, Mexico and Brazil are showing how innovation thrives when purpose and policy align—and we’re proud to build on that foundation.