Why is the Chinese government cracking down on fintech?

This appeared in The Millennial Source

The Chinese government is seeking to rein in the fintech industry, which for years has been under regulated when compared with mainstream banks and financial services.

The Chinese financial services company Ant Group, an affiliate of Jack Ma’s Alibaba Group Holdings Ltd., was expected to hold a record-breaking initial public offering (IPO) in November, potentially raising in excess of US$30 billion and boosting the company’s valuation to above US$300 billion.

Instead, following a meeting between Ma and Chinese financial regulators, the Shanghai Stock Exchange notified Ant that it no longer met the requirements for its proposed listing. The deal was off.

But Ant’s tumble from the high expectations its potentially record-breaking IPO had set is a consequence of a broader development in China.

The Chinese government is seeking to rein in the fintech industry, which for years has been under regulated when compared with mainstream banks and financial services.

This has big consequences for the country’s burgeoning fintech industry, which has profited greatly from operating under different rules and regulations than mainstream commercial banks.