Peer-to-peer lending has always been a very popular trend in China. That is not entirely surprising, as the country is keen on innovation and embracing new trends. But there have been a fair amount of problems with P2P lending in China over the past few months. New rules have been announced, which will put a vice grip on this innovative business model. At its core, any peer-to-peer service should not shut down regulated by a government. When conducting a P2P transaction, both parties should automatically assume responsibility for whatever happens to the money in the end. Moreover, users should be able to draft their own set of contracts to determine what the deal entails and how the repayment plan will work. Peer-to-peer Lending Rules Are Very Harsh Over in China, things are very different, as the government has a say in all matters. Not only do they control the Internet , but there is also a firm grip on the financial sector. Due to the recent peer-to-peer lending issues in the country, a new set of rules has been drafted. Unfortunately, they do not bear good news by any means. Mainly the online peer-to-peer lending industry will see some significant changes. That means companies can no longer accept public deposits, nor can they pool investors’ money to support their own projects. That latter one seems only natural, as there are plenty of crowdfunding options to raise [additional] capital for a project. But there is more, as it is no longer allowed to sell financial or wealth management products. A fascinating change, and one that was direly needed as well. Over the past few years, most wealth management programs and products have turned into Ponzi or Pyramid schemes. It was only a matter of time until regulation would catch up […]
