Chinese regulators ask Fintech firms to solve critical problems
The Chinese government has issued a list of “critical” issues that it wants China’s Fintech sector to solve, according to a report by local media. The list includes anti-money laundering, consumer protection, and the security of data, and was issued to the Fintech industry by the People’s Bank of China (PBoC) in a document dated March 16.
With the help of the Fintech industry, the China Banking Regulatory Commission (CBRC) hopes to solve the country’s “critical problems” in financial regulations. CBRC is the Chinese equivalent of the United States Securities and Exchange Commission (SEC), and is also the regulator of the People’s Bank of China (PBoC) – China’s central bank. The CBRC published an official letter on the website of its department of banking supervision, which was sent to the Fintech companies.
Summary of the situation
Fintech divisions such as Tencent and ByteDance were represented.
Regulators are concerned about the links between payment processing and financial services.
Chinese entrepreneurs have put 13 of the biggest technology companies on notice to address some critical issues. It’s a sign that fintech regulation is expanding into Jack Ma’s Ant Group. Fintechs like Tencent and ByteDance, as well as Chica banks and other entrepreneurs attended the meeting.
The meeting was attended by representatives of the banking regulator; this was confirmed by the Xinhua news agency. The Ant group was not invited to the meeting.
While regulators have noted the positive growth of fintech over the past decade, companies have complained of anti-competitive behavior that harms users. Representatives urge platforms to increase their activity in the loans they offer to banks to 30%. This all happened after similar changes were imposed on the Anti Group.
These measures are aligned with the recently published guidance on fintechs. Analysts suggest that these rules are driving up the cost of funding for large fintech companies and creating an imbalance in this area. At the same time, they emphasize that small businesses can use this momentum to make discoveries and drive economic growth.
Chinese regulators have stressed the need to end inappropriate links between payment services and financial services. This includes ending aggressive lending through payment sites, thereby eliminating an important advertising area for the contractor.
Fintech: Measures required by Chinese regulatory authorities
The agents also asked for more clarity on how to conduct business. Unlike state-owned banks, mobile payment systems such as Tencent’s WeChat don’t hand over as much data about each transaction to the government. Companies should also order credit reports to prevent data from piling up.
Currently, only two government agencies are authorized to issue credit reports. The conditions under which the private sector can be licensed are not yet clear.
Officials have required establishments to adjust their risk management in financing investments and making loans. Shares of the fintech that partners with Hong Kong fell Friday morning. Tencent fell 1.4%, while JD.com and Meltuam fell 2.8% and 3.1% respectively.
Eventually, regulators suspended Ant Group’s $37 billion IPO. When the project is completed, the cost will be historic, given its size. Jack Ma, the company’s CEO, disappeared after the news, fearing criticism.
Beijing seems to be watching fintechs’ moves to legalize non-compliant companies. Alipay and WeChat Pay are payment apps from Ant Group that were originally introduced to buy goods, but now function as a credit system.
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