China is increasing regulations on websites that offer cash loans, amid growing concerns about lax regulation in the fast-growing market.
According to Reuters, citing a report from China’s Caixin, Ji Zhihong of the central bank’s financial markets department said that the bank – along with other authorities – has created a special regulation for controlling financial risk on the internet. The government official reportedly said the regulation has already seen some successes.
What’s more, the report quoted Ji as saying that China is aiming to enhance its regulations for all online financing businesses, and that all of the financing activity should at the very least be subjected to a basic amount of oversight.
Microcredit firms in China have faced allegations that they have taken advantage of borrowers by imposing high interest rates on loans. Earlier in October, state-backed media entity Securities Times reported that new rules would take effect in the next six months to control the activities of more online microcredit companies, noted Reuters. The news service noted that in 2017, the People’s Bank of China added wealth management products to its list of regulated items as part of an effort to control risks to the country’s financial system.
In addition to stepping up oversight of online financing firms, China is also increasing its regulation of cryptocurrency. In recent weeks, it has banned both ICOs and bitcoin exchanges amid a clampdown on digital currency, which can be volatile but has been making people lots of money. Bitcoin started the year at around $1,000 and is now trading at over $6,000.
China isn’t the only government to start regulating bitcoin. Many countries – including the U.S., UK and Russia – have issued warnings and/or taken action against those accused of fraud associated with digital currency, including bitcoin.