UP Fintech Holding (TIGR 7.54%) and Futu Holdings (FUTU 9.33%), two online Chinese brokerages, were directed by the China Securities Regulatory Commission (CSRC) to stop taking on new Chinese clients, and as a result, their fintech stocks are plummeting today. Shares of UP Fintech and Futu have each decreased by roughly 25%.

The CSRC claimed in a recent statement that UP Fintech and Futu had both run trading firms without getting permission from the organization. Despite having a sizable clientele in Mainland China, UP Fintech and FUTU need brokerage licenses. Online brokerages that provide services to Chinese customers via the internet were still functioning unlawfully in 2021, according to a public statement by China’s Central Bank.

Futu stated that it “would cooperate fully with the CSRC by taking all measures to assess its cross-border services in mainland China and to adhere to all relevant rules and regulations.” Futu continued, “In the interim, the company will further improve and grow its foreign operations while continuing to provide good-quality services to its current clients in China.”

UP Fintech declared that it has been abiding by “rules and regulations in its everyday activities” and would refrain from accepting any new Chinese clients while working with authorities. Investors were undoubtedly surprised by the CSRC’s announcement, but Chinese regulators imposed rapid, onerous sanctions on corporations as they disliked the mannerisms. It’s one factor that requires investors interested in Chinese companies to be quite knowledgeable about the country’s regulatory framework and how it can affect particular stocks.

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