Carlos Valderrama Narváez partners with businesses to help them assess, manage, and control risks on projects including P2P, B2B, and B2C FinTech solutions, open banking, private funds, crypto hedge funds, ICOs, crowdfunding, digital wallets, and more. He is Managing Partner at Legal Paradox, a legal consultancy which advises FinTech companies, teaches legal modules on digital banking, FinTech, and blockchain at various Mexican universities, organizes Hyperblock Parties, collaborates with institutions to create sector-specific studies, and participates in national and international forums as speakers.
Mr. Narváez also serves as Mexican Regional Advisor to The British Blockchain Association, Member of LegalBlock, Co-founder and CEO of HyperBlock, and a Lecturer at Panamerican University, ITAM, and Tec de Monterrey. He has advised on strategic decisions for the Association of CrowdFunding Platforms, the Open Data Institute, ArkAngeles, Zave App, Bayonet Technologies, Inc., Kreditech Holding SSL GmbH, Fundary, Crédito Real, Banorte Bank, Financiera Rural, Visa Inc., Comisión Federal de Electricidad, Coeur d’Alene, Fibra Uno, Grupo Sidek-Situr, CIM Group, Trinity Industries, Inc, Caterpillar, Inc, NBCUniversal Media, LLC, and DHL Global Forwarding. He attended Yale’s Management Program for Lawyers.
The Politic: Tell me about your background and how you got involved with blockchain/crypto!
Carlos Valderrama Narváez: I myself was a financial lawyer, and then I started to serve as External Counsel for a huge bank here in Mexico. I was also on the Board of Directors of a financial company that issues public debt in our National Banking and Securities Commission and also in the London Exchange. When I started to learn more and more about blockchain technology, I fell in love with its possibilities, and then I started to do a lot of research on the topic. That led me to start my own practice at Legal Paradox in July, 2017, focused on Blockchain & FinTech. I also joined the Advisory Board of the British Blockchain Association.
We started to work really closely with our Mexican financial regulators, as we were involved in lobbying the Fintech law and its secondary legal framework. We even gave a lecture on the technology to some of the Bank of Mexico’s senior officials. Then, the Bank of Mexico issued a secondary provision which contains the General Provisions Applicable to Credit Institutions and Financial Technology Institutions, setting forth that there must be a healthy distance between the traditional financial system and crypto. We understood their arguments and knew we had a duty to explain the technology’s benefits to them.
In said context, we submitted a study to them, and to the Bank for International Settlements, explaining one by one all the misinformation upon which the argument of our Central bank were based. For example, we explained the Blockchain mechanisms which would prevent money laundering, and why the potential costs of the technology would be much lower than the costs accrued under our current financial system.
After that experience, we partook in the soon-to-be-published Fintech Law book, writing about the possibilities of our Mexican Fintech Law with respect to our regulatory sandbox. It’s possible, for instance, to launch financial services without legal complexity, under certain cases, by incorporating high tech solutions such as Blockchain. So, there are a lot of potential blockchain applications from a financial point of view, and there’s a lot of innovation to be done.
We also worked with Endeavor México and the British Mexican Embassy to produce two papers: “Endeavor Insight: Blockchain, The Promise of a Revolution?” and “What is The Potential for Open Banking in Mexico?” Then, we started to give blockchain lectures at some of the best universities here in Mexico, such as Tec de Monterrey, Universidad Panamericana, and ITAM. We also lectured in some events organized by Microsoft, Bancomer, and others. More or less, that’s our background.
What’s the current state of regulation in Mexico?
Our Mexican anti-money laundering program paves the way for the legal buying and selling of crypto. The recent Law to Regulate Financial Technology Institutions (Fintech Law) sets forth the possibility to create wallets and crowdfunding platforms, and also the possibility for banks and regulated financial technologies to use virtual assets in their transactions. It also provides the possibility of creating innovative financial models with the regulatory-sandbox legal framework by using blockchain. Under certain cases, that might even be doable with less regulation.
In said context, when you think about the opportunities to create financial models with blockchain for a market of more than 129 million potential users, needing just one feeless legal permit, I really think that we have amazing regulation in Mexico.
What projects are you currently working on?
I’m a founder and partner of Legal Paradox. We’re a legal services provider focused on Blockchain and FinTech, but we also know how to program and code in some of the blockchain-related languages like Solidity, Hyperledger, and Corda. When we first started working on blockchain two years ago, we were so curious about it that we undertook Solidity courses in Spain and then the first batch of Hyperledger courses taught by IBM here in Mexico. So, we provide legal services, but we also understand the underlying technology and are able to program smart contracts. In said capacity, we offer legal advice to different blockchain projects.
Any final thoughts?
There’s a lot of talent here in Mexico with respect to crypto and blockchain. There are huge, rapidly-growing exchanges, hedge funds, and FinTech companies, not only in Mexico but also throughout Latin America. Bitso for example, a Mexican exchange, is the most important exchange in LATAM, and it just received authorization for its operations in Malta. MakerDAO, which just made an announcement with Taringa, does a lot down here, too.
There are companies working on the intersection between blockchain and energy. It’s really interesting how quickly this technology is developing here in Mexico. That is why we had the Blockchain Summit Latam (BSL) in Mexico City in order to bring together experts who can present their vision of the region’s ecosystem with respect to blockchain and digital assets.
I think what I like most about this system is the speed with which its growing; in other words, how quickly the main actors in Mexico are turning to blockchain. Financial companies are getting involved. You’ve got huge banks working on using blockchain-based security protocols. You’ve got companies like Walmart making headway in this area. On top of that, you’ve got increasing involvement from companies in the international arena. For instance, Facebook with its Libra protocol or a major car luxury brand, which plans on transacting with smart contracts in order to collect royalties from their Mexico-based affiliates. You really have a lot of things happening in the space, and it’s moving so quickly.