Ant Group has reportedly reached a deal with Chinese authorities to become a financial holding company, making it subject to bank-like capital requirements.

Why it matters: The restructuring is likely to ease regulatory pressure for the fintech giant, but could also drastically alter its operations and curb its rapid pace of growth.

Details: Ant Group will be putting all of its business into a financial holding company, including all of its non-financial technology operations, such as its blockchain platform AntChain, Bloomberg reported.

  • Previous reports said that Ant initially tried to only relegate business units that fall under the purview of financial regulators to the holding company, including consumer and small- to medium-sized business lending, wealth and asset management, insurance, digital payments, and MYBank, its licensed bank.
  • An official announcement could come before the Spring Festival holiday, which starts on Feb. 11.
  • Regulators are still ironing out the exact requirements for financial holding companies, after announcing the corporate framework in September.
  • An Ant Group representative declined to comment.
  • Share prices in New York for its e-commerce affiliate Alibaba on Wednesday rose 3.5% on the news.

Context: Since the suspension of Ant Group’s highly anticipated blockbuster dual public listings, it has been facing intense regulatory headwinds as Chinese authorities move to rein in fintech giants.

  • Just last week, Ant Group removed all bank deposit products from its platform to appease authorities which deemed them too risky.
  • On Jan. 21, China’s central bank released new antitrust rules for third-party digital payments providers that will likely hit Ant, among other fintech companies.
  • JD.com’s fintech arm JD Digits also restructured in January, but took a different approach: It joined the finance unit with its artificial intelligence and cloud businesses into a new company called JD Technology.

READ MORE: CHINA VOICES | The unsigned op-eds that foreshadowed Ant Group IPO suspension

Eliza Gkritsi

Eliza was TechNode's blockchain and fintech reporter until July 2021, when she moved to CoinDesk to cover crypto in Asia. Get in touch with her via email or Twitter.