China’s central bank policymaker says that fintech needs regulation just like banks

People walk on foot from the headquarters of the Central Bank People’s Bank of China (PBOC) on September 28, 2018 in Beijing, China.

Jason lee | Reuters

BEIJING – The Chinese government at the center is making it clear that fintech companies like Ant Group fall under the same financial regulation as banks.

Many start-ups in China and other countries are using new technology to sell cheaper and faster financial services, from money transfers to loans. The rapid consumer adoption has prompted banks to work with start-ups, often emphasizing technology or fintech companies rather than financial institutions.

The deputy governor of the People’s Bank of China, Pan Gongsheng, wrote in the Financial Times on Wednesday, “But fintech is still finance in essence, so the principle of ‘equal business, equal rule’ must apply.” Pan is also the head of the national foreign exchange regulator, the State Administration of Foreign Exchange.

“We need regulation that insists on not giving the substance the form of a company,” Pan said. “The objective is to align business rules and standards with regulation to prevent arbitration.”

Chinese authorities have stepped up regulation on fintech companies over the past several months.

Most prominently, regulators suspended the Alibaba-affiliated Ant’s list in November, when the company made the world’s largest public offering.

Pan did not mention Ant by name in the op-ed, but did mention that the “non-bank mobile payment business, led by Alipay and WeChat Pay” has led to non-bank mobile payments in a year between 2015 and 2019 Saw a 75% increase. The ant group owns Alipay and is run by Tencent on WeChat Pay.

He said fintech companies take risks just like others in the finance industry, and can also infringe on “excessive” amounts of data and user privacy.

On Tuesday, China’s central bank governor Yi Gang signaled Ant to resume the IPO process if it could resolve legal issues.

Read the full opinion piece in the Financial Times here.


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