China is reportedly witnessing a surge in peer-to-peer (P2P) cryptocurrency lending amid the country’s recent liquidity crunch and the virtual currency markets’ bear season. Despite regulatory uncertainty, entrepreneurs are reportedly eying opportunities in the nascent industry.
Peer-to-Peer Cryptocurrency Lending Gains Popularity in China During Bear Market
Chinese media outlet, Sohu, has published a report on the increasing proliferation of cryptocurrency lending platforms.
Zhang Le, described as a veteran of the cryptocurrency industry according to Sohu, stated: “At present, most of the market only recognizes two major currencies, Bitcoin and Ethereum. This business is currently earning interest.” Xu Lizhen described those lending through the platform as comprising long-term cryptocurrencies holders who aren’t interesting in trading the markets in the short term.
“This is just the need. When the currency is low, people who are speculating in the currency will definitely not be willing to sell the coins. Once they are short of money, they must find such platforms. The demand has formed this market,” Zhang Le said.
The media outlet cited industry insiders as estimating that there are currently more than twenty startups operating in the cryptocurrency loan industry.
Nascent Industry Emerging Despite Looming Regulatory Uncertainty
Sohu reports that insiders as described those launching operations in the P2P crypto loan industry as “harden[ing[ their swords,” emphasizing the risks posed by regulation – “the biggest variable in the field.”
According to a rough translation, Xu Lizhen of New Express stated: “The [cryptocurrency] industry is called to stop, the market has not stopped.” Xu Lizhen described the crypto lending platforms as offering cryptocurrency investors the opportunity to “solve [their] liquidity problems in the down phase,” stating that such accept larges “pledges [of] BTC [and] ETH,” and that the “cost is beautiful.”
Hu Jie of the Shanghai Institute of Advanced Finance stated: “currently, digital currency mortgage lending business mostly occurs only in the currency circle. One party has funds (or digital currency) to seek lending, and the other party lacks funds (or digital currency) to borrow. Digital assets can be used for mortgages, and such private trading behaviors can be allowed.” Hu Jie also emphasized the potential contingencies associated with regulation, stating “if an entity specializes in this business and engages in this type of lending and financial management, it needs to have corresponding qualifications and conditions. Otherwise, it may be suspected of illegal lending and illegal business.”
Internet finance lawyer, Xiao Wei, stated: “This is a gray game. The essence is to solve the problem of asset liquidity or direct fundraising. But even in the gray industry, we must not adopt a market manipulation method. This will only bring the 266th fraud of the criminal law to our future. The risk of sin.”
Do you think that Chinese lawmakers will crack down on cryptocurrency lending? Share your thoughts in the comments section below.
Images courtesy of Shutterstock
Bitcoin.com there’s a bunch of free helpful services. For instance, have you seen our Tools page? You can even look up the exchange rate for a transaction in the past. Or calculate the value of your current holdings. Or create a paper wallet. And much more.
Use Bitcoin and Bitcoin Cash to play online casino games here.