China has been competing very well to become the world’s epicenter for cryptocurrency distribution, mainly with the UK and USA. They currently have the biggest advantage in the sector as their crypto, the digital yuan, is being distributed throughout the nation through their central bank and has seen large success. However China, and especially Beijing, has been really hard on fintechs such as Ant Group, Alibaba, and Tencent upholding new restrictions and guidelines requiring these companies to reconstruct entirely. Some of the main reasons for the shutdowns are failure to comply with antitrust laws and pressure to support the Communist Party’s agenda. Tencent is one of the most recent companies to be hit with reconstruction, but on March 24th, 2021, their founder Pony Ma released notice that he would be holding a meeting with Beijing’s antitrust authority. In this notice Pony Ma said that this was just a routine checkup, but investors are hopeful that this may mean some progress in Tencent’s reconstructions as the entire ordeal has made them a bit worried for obvious reasons.
During a conference call on Wednesday, Ma said that Tencent is in the process of reviewing the issues the anti trust administration brought to them in their previous investments and working diligently to make amends with them. Tencent president Martin Lau Chi-ping said that “the main focus [of the meeting] is actually on creating a healthy environment for innovation to happen in China.” Many fintechs in China have found that these strict regulations have made it difficult for them to compete with the rest of the world and that it creates massive delays in possible innovation. According to the South China Morning Post, Tencent’s WeChat messaging and mobile payments application appears to be next on the chopping block for rigorous antitrust restructuring.
Alibaba faced a thorough investigation at the end of last year when there were fears of the company violating anti monopoly laws, causing the whole company to require reconstruction, but there have been no results from the investigation announced yet. It seems that it would be wise for fintechs to oblige by the antitrust authorities’ wishes, as there could be pretty hefty fines as a result. It’s been estimated that twelve Chinese fintechs have been fined up to 6 million yuan, or €778,376, each for violations of these laws. Lau also added that for Tencent, the best course of action would be “just about changing the organization structure, and it has no big impact on business.” This could mean good news for investors, as reconstruction having adverse effects on normal business flow is obviously a prime concern.