The P2P Lending industry and all crowdfunded loans is an ever-changing landscape. It means we need to always be aware of what’s going on and things can change fast. This week, I’m looking at stories that are national, international and transnational. Let’s take a look….
A UK Equity Investor on P2P Lending
This AltFi piece describes as UK equity investor’s point of view of p2p lending in the UK. He thinks the ‘scramble for yield’, low-interest rates platforms have to offer in the UK (which are lower than here in the US) to compete with banks and chargeoffs are going to mean nominal returns for investors. He goes on to say that rates offered are just too low for the risks taken.
What do you think?
Top P2PL Analytics Firm Gets Funding
PeerIQ is an outstanding data source for p2p lending. I never miss their report on securitizations in the market. It’s terrific. More good news for them, PeerIQ secures $12 million in funding in their Series A round with strategic investors like TransUnion and Macquarie Group contributing money and expertise to the analytics company. Congrats Ram and team. Keep up the great work.
Ethereum based P2P Lending Platform Launches
In an attempt to bring p2p lending over the Ethereum blockchain, ETHLend launches so people can lend and borrow the cryptocurrency Ether (ETH). Using Ethereum’s smart contract platform, the first service is secured lending where ETHLend holds the collateral for the loan.
Given my personal interest in crypto-based p2p lending, I am incredibly interested to see how this goes. I think starting with a collateralized product makes sense if you want to do global lending when most countries don’t have credit scoring systems. I’ll be watching this closely.
Big Lender in China Leaves the Market
China is cracking down on the p2p lending industry. There are so many platforms there and some bad actors that the government has to step in to protect investors. One of the biggest p2p lenders in China, Hongling Capital, has decided to exit the business. This FT piece quotes management as saying they are not good at p2p business and think this a good time to redirect their resources to business units where they are more successful. More of this is going to come on both a voluntary basis and from the Chinese regulators. It could get ugly but the industry will be better off in China long term.
While not related to lending I had to mention that Bitcoin forked into two chains on Tuesday: Bitcoin and Bitcoin Cash (BCH). A hard fork is a change in the protocol where the groups run different software and different other technical specifications. A group of developers and miners thought they had a better solution for Bitcoin’s current 1MB block size so they have gone off to start their own coin, BCH. This is the essence of decentralization and choice. The majority wanted an incremental solution and this group wanted a bigger solution now. The BCH backers get to try their solution and see if the market likes it. Good for us and good for them. If you want the play by play on the why, how and when the fork happened, Coindesk ran some excellent coverage.