People pass by the headquarters of the People’s Bank of China (PBOC), the central bank, in Beijing, China, September 28, 2018.
Jason Lee | Reuters
BEIJING – The Chinese central government clarifies that fintech companies such as Ant Group fall under the same strict financial regulations as banks.
Many start-ups in China and other countries use new technology to sell cheaper and faster financial services, from money transfers to loans. The rapid adoption of consumers has led banks to work with start-ups, which often point out that they are technology or fintech companies, rather than financial institutions.
“But fintech is still essentially financing, so the principle of ‘same business, same rules’ should apply,” Pan Gongsheng, deputy governor of the People’s Bank of China, wrote in an opinion piece in the Financial Times on Wednesday. also leads the national exchange regulator, the State Administration of Currencies.
“We need regulations that emphasize the substance, not the form of a company,” Pan added. “The goal is to align business rules and standards with regulations to avoid arbitrage.”
Chinese authorities have tightened regulations on fintech companies in recent months.
Most visibly, regulators abruptly suspended Alibaba-affiliated Ant listing in November, just days before the company was established to hold what would have been the world’s largest initial public offering.
Pan did not mention Ant by name in op-ed, but mentioned that “the business with non-bank mobile payments, run by Alipay and WeChat Pay” recorded a 75% increase per year between 2015 and 2019 in non-bank mobile payments. Ant Group owns Alipay, and WeChat Pay is run by Tencent.
He added that fintech companies pose the same risks as others in the financial industry and could also collect “excessive” amounts of data and undermine user privacy.
On Tuesday, China’s central bank governor Yi Gang said Ant could resume the IPO process if it could resolve legal issues.
Read the full opinion article in the Financial Times here.