There's big news this week in the FinTech/p2p lending world so I am going to go over a couple of the bigger stories and see how they could impact us lenders.
Changes in Crowdfunding Rules
Crowdfunding rules are governed by the SEC. They finally came out with their rules on Title III that allows for non-accredited investors, like me and many of you, to invest in the equity of new companies. This is a potentially huge transformational type of ruling as companies are waiting longer and longer to go public so non-accredited/retail investors have been shut out from investing in the Ubers or AirBnB's of the world.
Now we can invest up to $2000 or 5% of our net worth OR annual income, whichever is smaller into a private business if you earn under $100,000 and up to 10% of your income or net worth if you make more than $100,000 annually.
Not everyone thinks this is a good idea. One thing is for sure, some of the public will get duped by a shady operator. Forbes in particular is bearish on these changes in this article where they get into compliance costs and other things they think will make it not successful. I disagree but it's a good read.
Then there are many others like me who think its a good thing. A nice description of the benefits are in this post by financial research platform FundWisdom.
Crowdfund Insider has particularly good coverage of this from the perspective of companies seeking funding, platforms and investors. A great article on how platforms are affected can be found right here and also mentions that no Audited Financials are necessary if the amount raised is less than $1 million, saving companies a huge compliance cost and that platforms themselves can take an equity stake in a business on their platform if they choose to do so.
Auction of BTC
The US Marshal Service is auctioning off 44,000 Bitcoins (around $18 million at today's price) as the last installment of the Silk Road confiscation of BTC. Coindesk, like usual, is leading the coverage here. As of today, the private sealed bid auction will end later today with the winner's announced sometime early next week (probably).
Some are wondering if the auction is one of the factors that has taken Bitcoin from $280 about 4 weeks ago to crossing over $500 yesterday and down to its current price of ~$410. It does seem like it is one of a few factors in the price rise especially if there are multiple bidders where they may not all win and get the coin they seek.
For those of you keeping track at home, Bitcoin is the strongest performing currency against the USD this year as Bitcoin is up 30.1% ($315,1 to $410 today) with the New Zealand Dollar second at 13%.
Record P2P Lending in China
Peer to Peer Lending is so big in China that they set records month after month. October saw $18.9 billion USD worth of Yuan lent on p2p platforms. There's great coverage of this market at Crowdfund Insider. China is like the wild west of p2p markets, the fiat version of Bitcoin lending with tons of players and lots of bad actors as "only 47 platforms" had to get shut down over there for shady practices. It's a market to watch that is for sure.
We have 3 huge stories going on in our industry this week.
The most influential, without question, are the new crowdfunding rules. For the nearly 3 years I have been blogging on p2p lending I have been seeking additional investing options other than the great platforms of Lending Club and Prosper. First I found Bitcoin and now we can participate in crowdfunded equity too. I am incredibly excited at this opportunity.
Retail investors had been locked out due to the idea that they were less sophisticated investors than higher net worth individuals. In some cases this is true so it's vitally important you understand what businesses you are investing in and there is transparency and accuracy of information presented to you.
The last Silk Road auction is big news in the Bitcoin space for good reason. The price has risen and the Marshal Service is one of the single largest holders of BTC pre-auction with these 44,000 being auctioned off. The last auction had only one winner, a VC who invests in Bitcoin companies. Who knows if there will be only one winner again or multiple winners this time?
China is a market we need to watch for many reasons that include how platforms do and if the failures there will lead to more regulation and compliance here. Either way, the p2p lending markets in China, here in the US and across the world just keep chugging along filling needs where existing financial structures are falling short and that will continue for years to come.