A view on PBOC's statement on China's new FinTech regulations

Andrew McGinty was recently interviewed by PaymentsCompliance on a statement issued by the People’s Bank of China announcing the creation of new FinTech regulations.

McGinty suggested that the statement is not empowered to prise existing rulemaking functions from other regulators. At the same time, “turf wars” between different stakeholders “would appear to be practical impediments to creating a legislation ecosystem for regulating fintech as a sector.”

McGinty described regulatory sandboxes as an “ideal outcome of the PBOC’s review”, but due to China’s “reactive, rather heavy-handed approach to regulation after the fact, China may end up going the other way and by tarring all businesses within the sector with the same brush when one or more bad apples implode”. He also sees a possibility of China adopting a similar approach for “fintech areas or activities that have not yet been identified and hence remain largely unregulated.”

He added, “Increasing regulatory demands on third-party payment providers all come at a cost and could be a challenge for some of the smaller payment players, which in turn could lead to further consolidation in the market.”

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