Two years after Colombia released its first regulations for crowdfunding, the country has hardly any fintechs in this niche, but that is set to change after the latest regulatory update.
The law allows for businesses to borrow up to US$ 13.7 million through crowdfunding platform, up from US$3 million previously, making these platforms more akin to mini capital markets. After the first rule came into force, “many people interested in establishing platforms were hampered,” said Jorge Padilla, lawyer and author of the book Crowdfunding. “The government’s attitude is increasingly aimed at making regulation more flexible, which is the best way to regulate these phenomena: through principles, and not restrictive norms,” he added. The update to crowdfunding regulations is just one part of a series of legal changes in the Colombian financial markets in recent years. The Government has introduced regulations that authorize digital onboarding and identity validation processes, and created the framework for a regulatory sandbox, which will help new business models get a hold in the industry.