'Milestone' regulation formulated to standardize P2P lending companies

China issued a regulation on Wednesday to toughen its control of peer-to-peer lending companies, thus cracking down on illegal fundraising activities through such platforms and preventing financial risks.

Jointly issued by the China Banking Regulatory Commission and three other ministries, the regulation emphasizes the role of P2P lending companies as financial information service intermediaries providing assessment and exchange of borrowing information for unrelated borrowers and lenders via internet platforms.

The CBRC provided a negative list to draw the business boundaries of P2P lending companies, forbidding them from cash pooling, absorbing public savings or providing any form of guarantee for borrowers.