chapter 02 The business companies that, on the effec- THE NEW FINANCIAL ACTIVITIES tive date of the FinTech Law, were already engaged in activities regulated by said Law, are to apply for a permit to the CNBV within a period of time not exceeding twelve months following effectiveness of the ap- The FinTech Law acknowledges crowdfunding and e-money institutions as financial plicable secondary regulation. Such permit, technology institutions, which have already proven to be viable and innovative. in turn, will be issued within the six months Crowdfunding Entities following effectiveness of the FinTech Law. Through new models of collective participation of people or companies, financing Such business entities may continue with for both people and small and medium enterprises may be fostered. For this, three crowdfunding models have been created: such activities while CNBV decides to grant a. them their authorization or not, provided Debt-based crowdfunding where investors grant mutual loans or other financ- ing that causes a direct or indirect liability for applicants; that such business entities publish upon b. Equity crowdfunding is intended for investors to purchase securities repre- effectiveness of the FinTech Law —on their senting the capital stock of the applicant’s business entities; and c. Revenue-based or royalty-based crowdfunding whose purpose is that investors web page or any means they use— that such and applicants enter into joint ventures or any agreement allowing the investor permit is being processed, therefore, any to acquire a distributive share or interest in a future good or in income, profits, royalties or losses arising from the applicant’s projects. such activity is not an activity supervised by the Mexican authorities. The main challenge these companies face is to rapidly reach the sufficient scale to be viable, since due to their nature they only provide “connection between projects and investors”, and may not carry out other activities; therefore, this will limit them FinTech Team, White & Case Mexico in generating income. A TWO-WAY PATH 29