Growing Chorus of Experts Wants More Fintech Regulation in China

There’s no denying that China is a powerhouse of mobile payment systems. It actually accounts for more mobile payments business than the United States does, by some reports, and though the amounts vary within the region—Hong Kong actually does quite a bit less business than even Singapore by some reports—there’s no doubt this area is big on mobile payments.

A new report has a growing number of experts sounding alarms and calling for greater financial technology (fintech) regulation.

The biggest problem with the current regulation, the growing body of experts notes, is that China’s regulation isn’t exactly lacking, it’s just not up to date. The current laws were fine for their time, but simply aren’t advancing forward at a pace that reflects the changes taking place in the market.

Though a lack of regulation was welcome in the early days—it let companies get set up without a lot of hoops to jump through—the largely maturing market now needs a little extra hand-holding in terms of what’s right, what’s safe, and what just can’t be.

There are too many risks associated with fintech to not more closely consider it; an example of the potential risk often cited is Ezubao, which took investors for $7.6 billion dollars, reports note, by offering a line of outright fake investment products.

It’s an issue that has long-plagued governments; how much regulation is too little to stop an event like Ezubao, and how much is too much to allow for ready development?

It does seem that China erred on the side of lack of caution in the early going, and that could have been helpful, but it’s not the kind of thing that can keep forever. Some regulation is always necessary, and finding that balance can be difficult as we’ve seen on several different occasions.

Still, a move to reconsider regulation and bring it up to date should be helpful going forward; staying out of new development’s way is a smart plan, but we’re past the stage of new development now.