News Briefing - Crowdfunding, SME And Alternative Finance

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The essentials are here and will be regularly updated. If you want to be well-informed about the investment crowdfunding scene, and you're short of time, this is the place to visit.

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1.UK – P2P

 

P2P Finance News reports:

 

“JUSTUS has joined the bank referral scheme by signing up with business finance aggregator Funding Options to provide loans to sole traders.

The peer-to-peer property lender has already funded its maiden sole trader loan valued at £15,000 through Funding Options.

 “With the British Business Bank, government and the UK’s leading clearing banks all coming together to help limited companies access finance through the new bank referral scheme, we put together a proposal to Funding Options to establish a lending programme for the unbanked sole traders,” Lee Birkett, founder of JustUs, said.

“Under UK credit regulations, sole traders are treated as regulated personal borrowers. Many sole traders find access to credit extremely difficult as the majority of regulated loans are underwritten electronically with a ‘computer says no’ outcome for many. At JustUs, a qualified human underwriter will assess the loan applications with a common sense approach.”

2. UK – P2P

 

Orca Money on risk appraisal.

 

“We discuss how peer to peer lending platforms (P2P) evaluate peer to peer loans. There are a range of P2P investment opportunities available on the market, but understanding which ones are safer than others depends on a number of factors; critically, how the loan originator assesses the quality of the loan.

The greatest risk posed to P2P investors is borrower default resulting in loss of funds. If the borrower is unable to repay their loan due to poor due diligence on the platform’s part or economic stress, perhaps due to unemployment, then investors may suffer losses.

Many P2P investments are secured with assets, such as property. If the asset hasn’t been accurately valued or the property market significantly dips, then it may drop in value and compromise the buffer of security protecting investors’ capital. For example, if the property value (i.e, security) is 125% the value of the loan and the property drops 50% in value, it is only worth 75% of the loan value, which means the property wouldn’t fully cover the debt owed should it need to be sold to recover the debt.

How a platform determines the creditworthiness of its borrowers and secures loans should be primary considerations when doing your research.”

 

3. US – Equity

 

Crowdfundinsider on JOBS Act latest.

 

“Way back in 2011, on the eve of the genesis of the Congressional legislation that became known as the Jumpstart Our Business Startups Act of 2012 (the JOBS Act), Mr. Weild penned an article in the Wall Street Journal on a subject that has captured widespread attention in recent years: the need for capital markets with rules tailored to facilitate trading in small cap securities – often referred to as venture markets. The title:  “How to Revive Small Cap IPOs.” 

The premise was simple. Absent federal legislation and SEC rulemaking which was “friendly” to the trading of small cap stocks in the secondary market, initial public offerings for these securities would be artificially limited. Friendly, of course, meant at the least, providing a market environment which would incentivize those in the business of buying and selling securities – licensed broker-dealers. Money naturally seeks “higher ground” – meaning higher returns.”


4. International – P2P

 

Bob’s Guide on a CapGemini survey:

 

“As with every trend, marketplace lending has evolved into different shapes and sizes, ranging from P2P lending platforms gaining banking licences to actually collaborating with established banks to enhance the offering of both. The regulatory environment around this is also evolving to better protect customers, providing guarantees where needed to ensure longevity and good business procedure.

Examining how this has grown over time helps identify similar patterns in other industries. Trends in marketplace lending according to CapGemini show that:

  1. Lending firms are consolidating platforms to offer better customer analytics for improved service. Technology will be easier to utilise, enabling focus on the development of new services
  2. Firms deploy technology to optimise credit risk analytics for advanced customer segmentation, personalised profiles and real time updates
  3. Operational enhancements with the use of technology (risk analytics, RPA, AI, APIs, etc.) enable automation across entire processes, while providing intelligent reporting
  4. Lending as a service model emerges to enrich direct lending business
  5. Banks are partnering with fintech firms to deliver innovation and meet evolving customer expectations at better cost rates
  6. Increased regulatory inspections are leading fintech firms to deploy more robust banking-like systems to ensure compliance that considers customers’ best interests
  7. Unquestionably, millennials drive the transformation for a more digital, tech-oriented service approach. Firms responding to this try to deliver data-driven lending to enhance their business as well as the customer experience with advanced front-end solutions
  8. The hype of digitisation is also increasing the need for cyber security platforms to protect businesses with authentication methods to combat fraud
  9. Leveraging new technologies streamlines and automates operations (IoT, blockchain, AI, etc.), while addressing new markets
  10. Open marketplaces gain traction as they offer transparency, faster service and competitive rates using technology-driven market dynamics


 

5. International – FinTech

 

Bitcoin is in a bit of a rally right now and BitMEX may be benefiting from the investor interest, according to Crowdfundinsider.

“According to a report from the cryptocurrency exchange, BitMEX has topped the record of Bitcoin trading during a 24 hour period. The company states that 1,041,748 BTC traded on the platform in 24 hours surpassing the previous record of 800,000 bitcoin traded (also held by BitMEX).

The Seychelles based BitMEX adds that its daily trading volume now over $1 billion.

The record-breaking 24 hours follows news of BitMEX becoming the first crypto-coin trading platform to hit a daily trading volume over $1 billion USD.

BitMEX CEO and Co-founder Arthur Hayes said the surge in trading and rising price of BTC is indicative of a “sophisticated understanding of the potential of bitcoin to redefine global markets.”

Hayes added that their engineering team has been scaling their hardware and network as well.”


 

6. International – FinTech

 

Coinbase clears itself of insider trading…

 

“An internal investigation into insider trading at Coinbase has determined that none took place, Fortune reports.

Coinbase, the biggest cryptocurrency exchange in the US, came under scrutiny last December when the price of Bitcoin Cash jumped only hours before the coin debuted on the exchange.

Crypto forums lit up with accusations that Coinbase insiders had bought a bunch of Bitcoin Cash just before the listing.

Insider trading often involves buying a stock on secret information just before a listing. Traders then sell the coin at a profit in the post-listing run up.

Industry experts have noted a phenomenon called “The Coinbase Effect”: each time a coin gets listed on the exchange, its price pumps.

Getting listed on Coinbase is the crypto equivalent of entering the major leagues. Not only do coins access a larger segment of the American market there, coin projects experience a rise in perceived legitimacy based on Coinbase’s own reputation as a compliant, generally reliable exchange.

Coinbase hired two law firms to conduct the investigation, which started last December. Coinbase told Fortune:

“We can report that the voluntary, independent internal investigation has come to a close, and we have determined to take no disciplinary action.”

Bitcoin Cash is a “fork” (code copy) of Bitcoin that launched in August 2017. The coin was created after after internal conflicts about the design of Bitcoin prompted Roger Ver to defect from the project and deploy a new coin with Jihan Wu.

The “fork” created tension across the crypto world. Some were concerned that a badly designed code fork would misplace digital coins or allow for double-spending. Others feared a rapid devaluation in the price of Bitcoin. Still others wondered whether Jihan Wu would abandon Bitcoin or use his monopoly over Bitcoin mining and chip manufacture to sabotage Bitcoin in favour of the Bitcoin Cash.

Seasoned crypto traders regard crypto price manipulation on exchanges as a fact of life.

The trick, they say, is in holding large numbers of coins with low liquidity, and timing sales as much as possible to correspond with exchange listings and other features of the hype cycle.

Even in the absence of outside hype, anonymous “whales” on minimally compliant exchanges have pumped coin prices by wash trading back and forth to themselves. “Frequent trading” can jack up prices and stimulate interest in a coin. Then, at the top of the bubble that they helped create, whales dump the coin on less savvy investors.

Coinbase further angered investors around the Bitcoin Cash launch last year after they announced they’d list the coin January 15th, 2018, but instead launched it two weeks earlier, without notice.

Coinbase CEO, Brian Armstrong, was recently named one of Fortune‘s “40 Under 40,” a list that ranks, “the most influential young people in business.”


Regards,