Ant Group, an affiliate company of Chinese conglomerate Alibaba, is understood to be undertaking a significant restructuring that could have broader implications for the digital asset industry.
Potential IPO
The company had been under regulatory scrutiny from the Chinese authorities over the course of the past three years. That investigation culminated in a hefty fine of 7.12 billion yuan ($995 million). The consequences of that regulatory investigation have taken a toll on the company’s valuation, plunging from a peak of $280 billion before the IPO cancellation in 2020 to a current estimated value of $79 billion.
Blockchain business implications
By pursuing this restructuring, Ant Group seeks to refocus on its core financial services within China. It’s unclear what the outcome will be for non-core businesses such as blockchain-based ventures. Potentially spinning these businesses off could unlock hidden value in blockchain-related activities. However, such a move would also raise questions regarding the future of these non-core businesses and their potential impact on the broader digital asset industry.
AntChain, the blockchain technology developed by Ant Group, holds a prominent position in China, being widely adopted across various sectors. Should Ant Group decide to spin off or divest this business, it could significantly alter the blockchain landscape in the country.
Originally introduced as “Ant Blockchain” in 2017 alongside Alipay, AntChain expanded its services to provide blockchain-as-a-Service (BaaS) to Ant Group’s partners in 2018. In mid-2020, Ant Group took a step further by transforming Ant Blockchain into a separate entity and rebranding it as AntChain. Besides blockchain solutions, AntChain is also actively involved in developing Artificial Intelligence of Things (AIoT), risk control technologies, and other value-added tech services.
Any alterations to its blockchain operations could impact the pace and scale of blockchain adoption in the country. While the Chinese authorities have discouraged crypto trading and mining, they have very much encouraged blockchain development.
The restructuring appears to be a response to the increasing regulatory pressures in the fintech industry. A further tightening of regulations on blockchain operations for fintech companies might potentially hinder innovation and growth in the sector.
Most likely the guiding hand of the government in China will have a material effect on how these blockchain-based businesses develop in the event of an Ant Group restructuring that would see them being spun out.