China issues first "Internet Finance Guidelines" to kick off what should be a completely new area of regulation

Written by Qinwen Wang || July 24 2015

Online loans, payments, and banking - nearly every segment of the banking industry has been affected by China's rapidly growing internet finance industry. For the past two years, it has done so without much regulatory oversight or intervention. That looks like it will change soon.  

Over the past weekend, ten central government ministries and industry regulators issued guidelines on internet finance aiming to encourage innovation, yet curb potential risks, ensure competition and protect the legitimate rights of investors and information security. Although this initial guidance didn't give much in the way of specifics, it does set the stage for future, more detailed regulations. 

What it did do was cearly divide supervisory duties on the guidance of internet finance for the first time. The PBOC will be in charge of the internet payment service. The CBRC will be responsible for internet loan business and internet e-commerce. The CSRC will oversee crowd funding and internet fund management. And finally, the CIRC will supervise the internet insurance business.

The new guidelines also label P2P platforms as information intermediaries rather than credit intermediaries and called for them to work with qualified banks for custodial services.  

It is still very early days in the regulation of internet finance and we can expect a lot more to come from regulators. What is clear though is that the emphasis will be on controlling the industry rather than shutting it down. Much like the 3rd party payment licensing in 2010-2011, the regulation will likely lead to a more stable industry going forward. 


China Payment Regulations