Best countries to launch a P2P exchange or platform

The concept of P2P lending

P2P lending is a mechanism for borrowing money between individuals using special online platforms.The main point is that people can borrow money, setting their own terms, without the involvement of banks, credit unions, or microfinance institutions.P2P lending is made possible by digital technologies and takes place online. A P2P platform is a website where borrowers look for funds and due to the absence of many unnecessary intermediaries, the cost of the loan is much cheaper than in traditional banks. P2P platforms are also popular among investors.In this article, we will tell you how to create a P2P platform and take a detailed look at all the legal issues involved in launching such a platform.In the modern world, the volume of P2P lending is estimated at tens of billions of dollars, and this market is growing every year. This is especially true for the European and Asian P2P lending markets.So which country should you choose to create a P2P lending platform?

Great Britain

The regulator of P2P lending is the Financial Conduct Authority (FCA).Minimum share capital is £50,000. Risks must be described to the client, and terms, interest rates, marketing materials and information on the website must be fully transparent and not misleading.In the UK, there is a Financial Ombudsman Service that P2P investors can contact to file complaints. Borrowers are entitled to a 14-day cooling-off period from the date of taking out a loan. During this period, they can cancel the loan, pay a penalty/fee.Let’s pay attention to the exception: P2P platforms that operate on a tip or donation model do not require authorization from the FCA.

Lithuania

The regulator of P2P lending is the Bank of Lithuania. The minimum authorized capital is EUR 40,000. Given our experience and the fact that the Bank of Lithuania is considered one of the most progressive and loyal regulators in the FinTech sphere, obtaining a license in Lithuania is much easier and faster than in other jurisdictions.The deadline for obtaining it is 1 month. In the future, it will be possible to resort to the possibility of passportization and, together with EMI or PSP licenses, work in other EU countries.

Estonia

In March 2016, legislation was passed requiring P2P lending platforms to obtain a license from EFSA (the local financial market regulator). The license can be obtained in two forms: for a credit intermediary or a lender. But there is an exception: companies that operate on a tip or donation model do not require licensing.

Finland

The regulator of P2P lending is the Financial Supervisory Authority of Finland (FSA). The minimum authorized capital is EUR 50,000. An important feature of this jurisdiction is that any handling of client funds must be carried out jointly with a partner bank or payment system, or the company must obtain a PSP license itself.

Germany

There is no legislation regulating P2P lending in Germany. The Banking Act is the basis for any lending mechanisms. Therefore, P2P platform operators are obliged to work with partner banks.It should be noted that a similar regulatory regime is applied in France and Italy.

Portugal

The regulator of P2P lending is the Securities Market Commission (CMVM). Two types of these platforms are distinguished: lending-based crowdfunding platforms and investment-based crowdfunding platforms. The minimum authorized capital is EUR 50,000.

Required documents for registering P2P platforms

As a rule, the regulator requests the following documents:

• Information about the legal entity that will organize the P2P platform;
• Data about the board of directors, including their education, work experience and business reputation;
• Financial statements for the last 3 years;
• Business plan and organizational structure;
• Business model, description of financial flows and assets;
• Description of internal anti-money laundering policies and procedures (AML/KYC policies).

This is a basic list of documents, but each jurisdiction has specifics that depend on the requirements of the local regulator.