Asia is a global leader in fintech, which is why Lendo is now also registered in Singapore. What we have been noticing is the surge in P2P cryptocurrrency related lending in China, which is a different model Lendo’s platform, which offers fiat loans in exchange for cryptocurrency collateral, and where the loans are made by regulated lenders rather than other crytpocurrency owners.
In China, there has been a significant rise in P2P lending platforms and that this is happening at a time when the nation is stuck in the middle of the latest liquidity crunch. CryptoInvestor. Asia reports that this happened despite, “The digital foreign currency markets seeing a long bearish period that has driven people to embrace P2P lending as a solution.” Now, slowly but surely, we are coming out of a bear market and this may open the way for other forms of crypto-related lending.
There are issues with P2P lending: it is risky for the lender since these platforms do not control the transactions that occur between its users. Furthermore, participants can only use them as a means of reaching other people who either want to borrow or lend cryptocurrency.
While it is true that P2P lending platforms are highly beneficial because they are private, cheap, easy to use, resistant to transaction censorship and secure, they also have their drawbacks. These include lower liquidity and a high possibility of fraud since users can simply decide not to pay their loans back.
It is unsurprising that the rate of cryptocurrency lending in China is increasing since it was one of the first countries to adopt digital currencies when they first emerged, as well as mining, with more than 70% of the total Bitcoin hashrate is concentrated within China.
According to Robin Hui Huang, professor of law at the Chinese University of Hong Kong in a recent research paper, the P2P lending surge in China can be attributed to three factors:
1. A high rate (56%) of Internet penetration in China at the same time as cryptocurrencies and their use cases increased in popularity.
2. A large supply of funds from investors.
3. The lack of banking services for small-to-medium-sized enterprises.
Even though China banned crypto in 2018, followed by the release of a firewall to block its citizens from accessing cryptocurrency on foreign platforms the interest in crypto-related loans has not decreased. At Lendo we are watching to see what develops in the country and we continue to explore the possible opportunities to operate in this massive market.