Financial Technology Regulations of China Businesses Must Be Aware Of

The rapid rise of financial technology (fintech) in the People’s Republic of China (PRC) inevitably generates financial risks.  To prevent and resolve these risks, the government has regulated many fintech application areas, including peer-to-peer lending, third-party payment, cryptocurrency, etc. For the last couple of years, Chinese authorities have been closely monitoring and regulating fintech businesses.

In the fintech development plan brought in by the Chinese government in August 2019, the official definition of fintech by the Chinese authorities is: “Financial innovation driven by technology, which aims to use modern scientific and technological achievements to transform or innovate financial products, business models and business processes, and promote the quality and efficiency of the financial services industry.”


According to CNBC, Chinese authorities stepped up efforts to improve lending to privately run, smaller businesses in the wake of the coronavirus pandemic this year.


Liu Fushou, Chief Counsel of China Banking and Insurance Regulatory Commission said “On one hand, we support reasonable innovation in the financial industry under the premise of controllable risks. At the same time, (we) maintain that innovation serves the real economy and must contribute to it.”


China’s fintech industry has been growing rapidly over the past decade and is dominated by the largest payments and peer 2 peer lending markets in the world. But it is not all smooth as Chinese authorities are imposing strict rules and regulations on the fintech industry. CBIRC’s Mr. Liang stressed that financial technology did not “change the nature of finance. All kinds of financial activities must be subject to regulation,” he said. “[Businesses] must follow the same practices, rules, and risk management requirements as long as they conduct financial operations of the same kind.”


What are the key regulatory authorities in China that are responsible for the financial services sector?

  1. People’s Bank of China (PBOC)
  2. China Banking Regulatory Commission (CBRC)
  3. China Securities Regulatory Commission (CSRC)

Regulation of Non-bank Payments

Stricter KYC Requirements- 3 types of accounts that have escalating regulatory requirements.

Tiered Regulatory Regime- better rated PIs will be subject to fewer regulatory scrutiny.

Emphasis on Small Transactions- spending limits in accordance with the principle.


China introduced two new sets of industry standards, one for registering all new blockchain projects, with 500 of them being included in the first two tranches, and the second one for 11finetch product categories for digital payments. Additional regulations were introduced for mobile financial payment platforms, voice and image recognition technologies as well.

Sometimes regulation can slow down a process, but that’s not the case in China. In fact, regulation is driving the FinTech market in China. The PRC is striking a balance between encouraging fintech innovation and reinforcing regulation.

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