Financial news coming from China is always a mixed bag of good and bad news these days.The local government wants to limit peer-to-peer lending, which will undoubtedly have an impact on Bitcoin as well.
China Cracks Down on P2P Finance
It is not the first time the People’s Bank of China wants to tighten regulation of the financial sector, particularly when Bitcoin and peer-to-peer lending is concerned. Although the bank has also expressed its interest in exploring newer commercial platforms, there are still some issues that will need to be addressed.
Ever since peer-to-peer lending became available in China – either through traditional finance or Bitcoin companies – the market has grown exponentially over the past few years. At the time of publication, this market is worth between US$20bn and US$40bn. However, this growth also brought some fraudulent offers to the table, which had to be weeded out quickly.
This is where problems started to ensue for the Chinese government, as data collection from these platforms is not providing them with enough details to track down culprits and fraudsters. While the government has managed to shut down several fraudulent offerings and arrested over twenty people in recent months, they want to take things to the next level.
Inside sources have told Reuters the Chinese government is planning to crack down on peer-to-peer lending shortly, by limiting the activity of these platforms and investment firms. This would also impact bitcoin companies active in this space as they would be subject to much stricter regulation and data collection on all of their users.
How these changes would be enforced, remains unknown for the time being. Handing over sensitive financial information on all customers seems to be the most likely outcome, particularly when Bitcoin lending platforms are concerned. Doing so would allow the Chinese government to check these people’s credit history and reduce the number of fraudulent offers in the peer-to-peer lending space.
If you liked this article follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin and altcoin price analysis and the latest cryptocurrency news.