- China Banking and Insurance Regulatory Commission (CBIRC) recently shared plans for global regulations on crypto assets
- All financial businesses should be licensed and included in financial supervision. Therefore, as long as it is engaged in similar financial business, it should obtain a statutory financial license
On September 7, the China Banking and Insurance Regulatory Commission (CBIRC) recently shared plans for global regulations on crypto assets and ideas to build effective mechanisms to mitigate the risks of internet finance. The CBIRC is an agency of the People’s Republic of China authorised by the State Council to supervise the establishment and ongoing business activities of banking and insurance institutions.
This paper, titled “The International Supervision Thinking of Virtual Assets and Its Enlightenment to the Establishment of a Long-term Mechanism to Prevent Internet Financial Risks”, is composed by Li Wenhong, secretary, Party Committee and Director of Shenzhen Banking and Insurance Regulatory Bureau.
A Look at the CBIRC Plan:
The working paper of CBIRC states that as financial services are constantly being exposed to cutting edge technology, regulators should assess the impact of Blockchain, distributed accounts and other fintech developments on banking business models, evaluate risks, strengthen communication with fintech firms and strengthen resource allocation.
- The new business model must be timely and thoroughly qualitative, and the nature of the business and the applicable regulatory framework should be clarified.
- All financial regulatory authorities are required to follow the principle of “penetration”, under which they would be required to deeply study its business model, product structure and process, analyze its business essence, legal relationship and risk characteristics, clarify whether it needs to be included in supervision, the type of license to be applied for and the applicable regulatory rules.
- All financial businesses should be licensed and included in financial supervision. Therefore, as long as it is engaged in similar financial business, it should obtain a statutory financial license, follow the same business rules and risk management requirements, maintain fair competition, avoid regulatory arbitrage, and prevent illegal use of technology. If financial businesses conduct business without a license or fail to comply with regulations, measures will be taken accordingly.
- Measures will be taken when the scale is not large and the social impact is small to prevent the occurrence of “like online loan problems” in days ahead. This is because rectification after the illegal or irregular financial business has developed to a larger scale will often cause consumers to pay a heavy price, and is likely to interfere with the normal operation of the economic system.
- The CBIRC paper also states that it is necessary to closely follow up and study the practical experience of various countries in the regulatory sandbox mechanism, and continuously improve the Chinese version of the “regulatory sandbox”.
The issues addressed have been framed with a view to create long-term and stable development of China’s economy and the society at large.