Leading Bitcoin based p2p lending platform BitLendingClub is going to close its doors.
In an announcement sent out to all lenders and borrowers this morning, the company said that 'regulatory pressures' made operating the company no longer feasible. The specific regulations are not stated although its likely that its related to FinCEN and the MSB (Money Service Business) requirement placed on some Bitcoin companies. Regulations regarding BTC are confusing to say the least with FinCEN/Dept of Treasury, the CFTC and the IRS all qualifying Bitcoin differently. It makes for confusing and difficult regulatory waters to navigate.
No new loans will be issued or new investments taken. The platform will stay open through August 2017 to accommodate the payments and servicing of existing loans on the platform.
Starting next week there will be restricted functionality on the site leading to the only functions being paying on an existing loan or withdrawing funds. The August expected termination date is in line with ~30 days of staying online after all existing loans are paid out.
While you can withdraw funds up to the expected termination date, BLC recommends withdrawing sooner rather than later. I agree with them.
On a personal note, I think Kiril and his team worked hard to put out the best and most professional Bitcoin based platform out there. I am disappointed that they didn't make it.
There is still room for a professional and potentially profitable Bitcoin lending platform although the regulatory environment will have to be made clearer before any can last over a longer term period of time. The USD p2p lending markets saw the same thing with the shutdowns and SEC guidance, followed by the quiet periods and restart to issue and fund loans.
Hopefully when the regulatory requirements are cleared up we can get some new players into the fold for Bitcoin based peer lending.