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End of China’s Fintech Crackdown Could Revive Investor Confidence

Techcrunch | Rita Liao | Jul 7, 2023

Fined - End of China's Fintech Crackdown Could Revive Investor Confidence

The Chinese government's regulatory crackdown on the fintech industry, which began in late 2020, appears to be concluding with substantial fines levied on Tencent and Alibaba, the two dominant players in China's digital payments market.

  • Tencent and its payments subsidiary Tenpay have been fined approximately $410 million, while Ant Group, Alibaba's fintech affiliate, faces a fine of around $1 billion for a variety of illegal activities.
    • This crackdown signals and end to China's broader initiative to control the growing power of its tech sector and increase regulatory oversight in rapidly developing fields.
    • The clampdown has led to significant changes in the industry, including the cancellation of Ant's initial public offering in 2020, which would have been the largest in history, and a major restructuring of Ant that has significantly reduced its influence on consumer finance.
    • The conclusion of the crackdown could potentially restore confidence in the fintech industry among investors and businesses, which has been shaken over the past three years due to regulatory actions. The end of the corrective phase could stimulate the industry and rekindle investment interest.
    • Tencent and Alibaba, will need to adapt to a new regulatory environment that treats them more like traditional financial services. This could impact their business models and strategies moving forward.

See:  Tencent’s Finally Marching into Web3

  • The fines and regulatory scrutiny signal a shift in China's approach to fintech, moving from a period of intense correction to a phase of "business-as-usual supervision."

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