China’s government shocked the fintech industry by introducing firm financial measures, similar to the banking sector. Ant Financial even had to cancel its massive IPO. But what we have seen is only the start of more government action to regulate the internet, says fintech expert Sara Hsu in the Diplomat. Managing capital and data are key elements.
The strongest voices calling for further fintech regulation demand greater data security and privacy protection within the sector. Government and non-government experts have asserted that large internet firms have become “information islands,” obtaining large amounts of information without increasing people’s access to information services. Such experts believe that shared information can improve social efficiency, particularly in extreme cases, such as the COVID-19 epidemic. Shared information can also provide public data to enhance government capabilities and improve public services.
At the same time, Chinese experts have also asserted the need for improving personal data privacy rights and safeguarding national data security. The idea is that data must be separated according to its necessary control and privacy risks. While China’s legislature has already passed a Civil Code to generally protect individual consumers’ data, there remains a great deal of concern about what type of data exits the country and how cross-border data flows can be properly managed. Some technology experts have even recommended that a national data bank be established and run by a special agency in order to properly collect, store, and transmit data.
Some government researchers have requested that other types of fintech regulation be put into place in order to better control loan funds and improve the credit investigation environment. Last month, the People’s Bank of China issued the “Measures for the Management of Credit Investigation Services (Draft for Comment),” which would prevent credit collection firms from collecting information from illegal channels or through deceptive means, collecting fees from individuals or firms, or otherwise violating the rights of the information subjects. Currently, there are credit investigation companies that have questionable credit collection, storage, and use practices. The current draft regulations follow two previous rules on credit reporting institutions and may be followed by additional rules.
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