In a joint statement the China Banking Regulatory Commission, Ministry of Public Security, Cyberspace Administration of China and Ministry of Industry and Information Technology said that some of these firms are running Ponzi schemes and raising funds illegally, the Shanghai Daily said.
Under the new regulations an individual cannot borrow more than 200,000 yuan (US$30,072) from one platform, up to a maximum of 1 million yuan, the news site said.
Corporate borrowers can now borrow 1 million yuan per platform and 5 million in total, it said.
Peer to peer firms cannot take public deposits, sell wealth management products or provide guarantees for investment principal under the new rules, the Shanghai Daily said.
In April, state-owned news agency Xinhua reported that tighter regulation was already affecting the industry, with only four new firms set up in the previous month. The total number of platforms had fallen for four consecutive months, Xinhua said.
A recent survey by Accenture found that China now leads the world in financial technology investments.
Investments in Asia-Pacific financial technology ventures, primarily in China, reached $9.62 billion by 31 July, more than twice the $4.26 billion invested in the region in all of 2015, Accenture said.
This surpassed North America, which saw $4.58 billion in financial technology investments up to 31 July, and Europe, which attracted $1.85 billion in the same period, Accenture said.
"However, deal volume remains higher in North America and Europe, as the Asia-Pacific increase is due to big investments in a few select fintech companies in China," the report said.