The People’s Bank of China (PBOC) has reminded financial technology (fintech) firms to comply with financial laws and regulations, in the central bank’s new set of guidelines released earlier this month.
See related article: China has seen blockchain’s future and it doesn’t include cryptocurrencies
Fast facts
- The PBOC’s “Ethical Guidelines on Technology in the Finance Sector” emphasized that fintech companies are businesses in the finance sector that must obtain required licenses to operate legally.
- The PBOC warned fintech firms to keep their business operations strictly within the scope of the license, which means they aren’t permitted to conduct business activities authorized by licenses under “technological innovation.”
- The central bank’s attempt to differentiate financial institutions from tech firms can have rippling effects on Chinese blockchain companies, as there is currently no financial license for the popular distributed ledger tech.
- “This means that if a financial business is carried out under ‘blockchain technology,’ it will not meet the requirements of the guideline,” Liu Yang, a partner at China’s Deheng Law Firm, told Forkast in a text exchange. “Cryptocurrencies issued under ‘blockchain technology innovation’ definitely do not comply with the PBOC’s guidelines.”
- China banned crypto trading last September, which drove numerous crypto businesses to leave the Middle Kingdom.
- Liu expects blockchain firms to improve data security and transparency in fintech, which are some of the issues in the sector highlighted by the PBOC in its guidelines.
See related article: China fuels blockchain development despite stricter crypto ban
