Best Places to Launch Your Own P2P Platform
P2P lending is a mechanism for borrowing money between individuals using special online platforms. The main point is that people can borrow money by setting their own conditions without the participation of banks, credit unions or microfinance organizations.
P2P lending is made possible by digital technology and takes place online. A P2P platform is a site-platform where borrowers are looking for funds and due to the absence of many unnecessary intermediaries, the cost of a loan is much cheaper than in traditional banks. Also, P2P platforms are popular with investors. In this article, we will tell you how to create a P2P platform and take a closer look at all the legal issues of 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 European and Asian P2P lending markets.
So which country to choose in order to build a P2P lending platform?
- Great Britain
P2P lending is regulated by the Financial Conduct Authority (FCA). The minimum share capital is £ 50,000.
The risks must be described to the client, furthermore the terms, interest rates, marketing materials and information on the website must be completely transparent and not misleading. The UK has a financial ombudsman office that P2P investors can contact to file complaints. Borrowers are entitled to a cool-down period within 14 days from the date of taking out the loan. During this period, they can opt out of the loan by paying the penalty / commission.
Pay attention to the exception: P2P platforms that operate on the tip or donation model do not require authorization from the FCA.
The P2P lending regulator is the Bank of Lithuania. The minimum authorized capital is EUR 40,000. Taking into account our experience and the fact that the Bank of Lithuania is considered one of the most progressive and loyal regulators in relation to the FinTech sphere – it is much easier and faster to obtain a license in Lithuania than in other jurisdictions. 1 month is the term to acquire a P2P license in Lithuania.
In the future, it will be possible to employ the possibility of certification (passportization) and, together with EMI or PSP licenses, work on the territory of other EU countries.
In March 2016, legislation was passed that obliges P2P lending platforms to obtain a license from EFSA (the local financial market regulator). A license can be obtained in two forms: for a credit intermediary or a lender. But there is an exception: companies that operate on the tip or donation model do not require licensing.
The regulator of P2P lending is the Finnish Financial Service Authority (FSA). The minimum authorized capital is EUR 50,000. An important feature of this jurisdiction is that any handling with client funds must be carried out jointly with a partner bank or payment system, or the company must itself obtain a PSP license.
There is no legislation that would regulate P2P lending in Germany. The Banking Law is the basis for any lending mechanism. Therefore, operators of P2P platforms are required to work with partner banks.
Note that a similar regulatory regime applies in France and Italy.
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 share capital is EUR 50,000.
- Required documents for registration of P2P platforms:
As a rule, the regulator requests the following documents:
- Information about the legal entity that will organize the P2P platform;
- Information about the board of directors, including their education, work experience and business reputation;
- Financial reports 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 specificities that depend on the requirements of the local regulator.
The professionals of our company have significant experience in supporting Fintech projects in different jurisdictions. Contact Legarithm via chat to get answers on your questions regarding the creation of your own P2P platform.