China’s central financial institution coverage says that fintech wants regulation similar to banks
People walk past the headquarters of People’s Bank of China (PBOC), the central bank, in Beijing, China on September 28, 2018.
Jason Lee | Reuters
BEIJING – The central Chinese government makes it clear that fintech companies like Ant Group are subject to the same stringent financial regulations as banks.
Many startups in China and other countries are using new technology to sell cheaper, faster financial services, from money transfers to loans. Rapid adoption by consumers has led banks to partner with the startups, who often emphasize that they are more tech or fintech companies than financial institutions.
“But fintech is essentially still finance, so the same business, same rules” principle should apply, “wrote Pan Gongsheng, deputy governor of the People’s Bank of China, in an opinion piece in the Financial Times on Wednesday. Pan also heads the national foreign exchange regulator, the State Administration of Foreign Exchange.
“We need regulation that emphasizes the fabric, not the shape of a company,” Pan added. “The aim is to align business rules and standards with regulations to ward off arbitrage.”
The Chinese authorities have tightened regulation of fintech companies in recent months.
Most famous, regulators abruptly suspended the listing of Alibaba-affiliated Ant in November just days before the company’s planned IPO.
Pan did not mention Ant by name in the statement, but noted that the “non-bank mobile payment business” run by Alipay and WeChat Pay had seen 75% annual growth in non-bank mobile payments between 2015 and 2019 recorded. Ant Group owns Alipay and WeChat Pay is operated by Tencent.
He added that fintech companies pose the same risks as others in the financial industry, and may also collect “excessive” amounts of data and violate user privacy.
On Tuesday, the governor of China’s central bank, Yi Gang, said Ant could resume the IPO process if he could resolve legal issues.
Read the full statement in the Financial Times here.