I think it has to do with these recently proposed regulations regarding minimum capital requirements for fintech companies by the PBOC and CBIRC:

https://www.regulationasia.com/pboc-cbirc-issue-draft-rules-for-small-loans-businesses/ https://twitter.com/onlyyoontv/status/1323613460463198210

These proposed minimum capital requirements would primarily impact Ant’s consumer/SMB lending business https://twitter.com/glennluk/status/1298294444664320001

This is not the first time financial regulators have issued rules that potentially impact lending.

In September, limits were placed on the amount unsecured loans could be securitized.

http://www.cbirc.gov.cn/cn/view/pages/ItemDetail.html?docId=929448&itemId=926

I wrote earlier about how Ant is unbundling the traditional credit card stack by separating out the payments / transaction network component from the credit component. https://twitter.com/glennluk/status/1298294432991571970

Traditionally credit card issuers (banks) take on credit risk by assuming these unsecured loans on their balance sheet.

Ant, with its asset-lite approach, was trying to unbundle origination from credit risk.

Perhaps regulators felt that this offloaded credit risk disproportionately to the underwriting bank, increasing systemic risk.

These newly proposed rules seem aimed at making sure fintech players like Ant have some “skin in the game”

Similarly, proposed rules could force Ant to share more of its proprietary data with its partner banks.

But the main goal from a regulatory perspective is to make sure the underwriting process is working properly.

But it could also erode one of Ant’s competitive advantages.

Additional color and regulatory perspective from the director of the CBIRC

Overall fairly balanced views IMO, with a clear emphasis on making sure the consumer (borrower) is protected.

https://user.guancha.cn/main/content?id=405195

Agree with Lillian here. It’s not the Jack Ma vs. CCP show, as enticing as that headline may be.

It’s more like the banks, fintech cos. + consumer advocates (regulators) together trying to figure out how best to change a wobbly tire while the car is cruising down the freeway. https://twitter.com/lillianmli/status/1323672369735573507

As I wrote earlier, regulatory changes are always going to be a source of uncertainty.

It was dramatic because it happened just as the co. was about to list but this won’t be the last time this happens. To invest in Ant, you need to get comfortable with this overall concept. https://twitter.com/glennluk/status/1298457339041742848

I view the relationship between regulators, Ant and other fintech cos. less as a combative relationship and more as a symbiotic one.

Regulators know they need cos. like Ant to push the boundaries + generate real-world situations that can be analyzed.