There are no binding laws or regulations yet in China to set forth the definition of RegTech, thus no specific license is required for RegTech-service providers. However, it should be noted that the RegTech-services providers are usually technology companies undertaking the business in terms of big data, blockchain, software, artificial intelligence, Cloud computing etc. Accordingly, Tech companies need to apply for licenses or qualifications for business related to software and other technology required by specific market regulatory department.
Additional comments regarding the legal situation for RegTech-services or what RegTech’s must be aware of in this business area
From a legal perspective, RegTech service providers need to pay attention to increasingly tightened regulations towards cybersecurity and data security in China, relating to big data analysis and data processing etc.
From a business perspective, FinTech companies are advised to be aware that the RegTech industry heavily depends on the demand on a governmental and regulatory side, who are major parties of procurement. For national security's sake, companies with a major foreign background might not be preferred.
Economic conditions
Market size for RegTech-services and biggest companies in this business area
The RegTech industry sees an increasing market based on more policies and 'top-level design' to encourage its development. There has been a drastic growth in investment into IT-services for banks and financial institutions. Following the implementation of 'General Development Framework for RegTech', the market for RegTech-services may be rapidly enlarged and deepened.
Though, without a precise market share number, it should be noticed that the biggest companies that have close cooperation with the government related to RegTech include Huawei, ZTE and Inspur etc.
Additional comments regarding the economic situation for RegTech-services or what RegTech’s must be aware of in this business area
For traditional FinTech corporations who want to develop RegTech business, kindly note that giant internet platform companies or FinTech companies are facing increasingly strict regulations and supervision in China concerning anti-monopoly and privacy protection etc. Emphasis was also made on the separation and isolation between the businesses of finance and technology, for the purpose of reducing systematic financial risks. In this regard, RegTech is more of a tech-side industry, which plays an essential role in financial infrastructure to promote more efficient and high-quality financial supervision and regulation.