Ant Group's IPO could be headed for more trouble

China's suspension of Ant Group’s $35 billion IPO is "just the beginning of a renewed campaign by China to rein in the fintech empire controlled by Jack Ma," Bloomberg reported Tuesday.

Details: "Authorities are now setting their sights on Ant’s biggest source of revenue: its credit platforms that funnel loans from banks and other financial institutions to millions of consumers across China," the article noted, citing unnamed sources.

Why it matters: Ant Group's IPO wasn't just set to be the biggest of all time, it was meant to serve as a tentpole of China's growing influence in the global financial sphere.

• As Axios' Felix Salmon notes: "Ant provides the technology that powers much of the Chinese economy, from borrowing to saving to investments to insurance. A failure of its systems could have devastating consequences for hundreds of millions of people."

What's next: Bloomberg also reports that the China Banking and Insurance Regulatory Commission "plans to discourage lenders from using Ant’s platforms and has already asked some to ensure their portfolios are compliant with stringent draft regulations announced on Monday."

• The proposed measures call for platform operators to provide at least 30% of the funding for loans. That would render many of Ant’s existing transactions noncompliant, as the company currently keeps only about 2% of loans on its own balance sheet. The rest of the loans are funded by third parties or packaged as securities and sold.

Be smart: All this could probably have been avoided had Ma not railed against financial regulators, said that financial regulation was outdated, and claimed technology companies should not be subject to regulation in recent remarks.

• The suspension of the IPO puts into limbo bids of nearly $3 trillion from retail investors in China, who play a much bigger role in financial markets than their U.S. counterparts, and a $400 million expected payday for the banks assisting with the listing.
• The suspension also gut-punched shares of Ant Group's parent company, Alibaba, which will keep an ownership stake of one-third of Ant after the IPO, and Chinese tech companies broadly.