News Briefing - Crowdfunding, SME And Alternative Finance

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Today's Briefing

1.UK – P2P


P2P Finance News reports more developments at Thin Cats, which has recently re-branded and moved away from the term “crowdfunding”:


“THINCATS has pushed back the launch of its Innovative Finance ISA (IFISA) and is introducing an investor fee for the first time.

The peer-to-peer business lender previously told Peer2Peer Finance News that it planned to launch its IFISA by the end of 2017, with head of retail Stewart Cazier saying that he would be “very disappointed if it didn’t happen this year”.

But the Midlands-based firm said on Friday that building new systems to accept and administer ISA investments had taken longer than expected, so it will not launch the tax wrapper until the new year.

It said it will confirm a launch date once it is confident that the new systems enhancements are ready to deploy.

The company confirmed its plans for a staggered roll-out of the ISA, with priority given to lenders who had already registered an interest in the product, in the order that they registered.

It will only offer the ISA to new clients after existing customers have had the opportunity to open an ISA account, which it expects to be in the next tax year.

ThinCats also announced that it is introducing a lender fee for new investors, equivalent to a one per cent reduction in annual returns, effective from 1 January 2018.

It attributed the new fee to its “considerable investment in the business” which it said “could not be sustained by the original revenue model”.


2. UK – P2P


Meanwhile, RateSetter has confirmed that it will launch its Innovative Finance ISA (IFISA) in February 2018 and that “existing investors will get a two-week head start on the product”, according to P2P Finance News.

The peer-to-peer platform, which gained full authorisation from the Financial Conduct Authority in October, said the IFISA will be available for current lenders only for the first two weeks “as a reward to our loyal customers”.

The platform, the last of the ‘big three’ to launch its IFISA, said it would work in a similar way to its existing product range, with the added benefit of tax-free earnings.

However, it will only allow transfers of other ISA money from the next tax year, starting on 6 April 2018.


3. US – P2P


A new form of securitisation emerges from Lending Club, reports Crowdfundinsider:


“LendingClub the leading marketplace lending platform in the US, has closed a “first-of-its-kind” transaction: a whole loan transaction structured as a tradable, pass-through security labeled as a Consumer Loan Underlying Bond or “CLUB Certificate”. This first transaction totaled $25 million with an institutional investor seeking a liquid vehicle with which to access the consumer credit asset class.

LendingClub said the CLUB Certificate transaction consisted of whole loans structured as a pass-through security. The instrument trades in the over-the-counter market with a CUSIP and is cleared through the Depository Trust and Clearing Company (DTCC).

Scott Sanborn, CEO of LendingClub, described the Club Certificate as a new milestone that indicated LendingClub’s ability to innovate for both investors and borrowers.”


4. US – FinTech


Crowdfundinsider a) reports a regulatory development and b) carries comment from Barry James, a well-known alt-fi commentator.


a)    “The Chicago Mercantile Exchange (CME) and the CBOE Futures Exchange (CFE) self-certified new contracts for Bitcoin futures and the Cantor Exchange (Cantor) self-certified a new contract for Bitcoin binary options.

CFTC Chairman J. Christopher Giancarlo said that Bitcoin is a commodity unlike anything the CFTC has dealt with in the past and they have held extensive discussions with exchanges on proposed contracts. As a result of these conversations, the CME, CFE and Cantor have agreed to enhancements to protect customers and maintain orderly markets.”

      b) “Until now ‘Fintech’ has had a rather timid relationship with crowdfunding – and to put it bluntly many Fintech founders would have rather be seen dead in a ditch than crowdfunding a million dollars or two – even as a first step.

Initial Coin Offerings (ICOs) are crowdfunding on steroids – a very different world, and have a very different image. The fact that the number – the raise – sometimes go above $250 million certainly helps. As does the $20 million average raise so far (see An order of magnitude greater.

Not only are there much nearer the sums that fintech startups need to really get their kick-start but ICOs, although clearly a form of crowdfunding (from inception and even more clearly so as time passes) so not and will not have this image problem.

Jamie Dimon and the incumbents know this. So they’d like to create an image problem with wild statements about Bitcoin only being fit for criminals and such.


So in 2018 we can expect to see more in the way of regulatory attacks from the incumbents too – perhaps the kind that prompted Jay Clayton’s no doubt temporary blindness as to when tokens are securities and when they’re not. Which stands little scrutiny.

We should, no MUST, prepare to repel them with reasoned, more balanced, arguments and evidence – and a demand for evidence from the other side of the arguments.

But ICOs are just for creating coins, right? Wrong. Or just for fuelling Blockchain projects? Wrong again. Although this is currently the conventional wisdom – and was evident at the World Funding Summit 2017 last week, more on which soon – it’s wrong, and cannot hold for long.

Yes in the short term people will prefer blockchain based projects and startups both because it ‘feels right’ that the Blockchain should somehow be funding itself and because of the promise of rapid growth from building the new blockchain based ecosystem. We’ve certainly already seen a spread from hard-core funding of core tech, protocols and coins into other forms of tech and innovations more loosely connected to or using blockchain.

But what gets funded is simply a choice for the crowd and there is no intrinsic reason that that has to be a hard-core blockchain based technology, product or service.

The besetting sin of those who predict the tech future is to assume that the new will 100% sweep away the old – whereas the reality is that in most cases it partially displaces it and we end up with both.

As has been observed not everything needs to be ‘on the blockchain’ – or will necessarity benefit from it. For some Fintech applications is will be crucial because it is transformative (and someone will take that step and reap the rewards). For other it may just slow things down or add cost needlessly.”


5. International - FinTech

"A big Chinese group and a US not-for-profit have triumphed in the second annual Financial Times fintech awards, with Ant Financial taking the “impact” prize and QCash winning for “innovation”. Ant Financial is the 800-pound gorilla of the fintech world. With a dominant share of more than half of China’s fast-growing $5.5tn mobile payments market, this spin-off from the Alibaba ecommerce group has raised more funding than any rival and is valued at over $70bn — more than most banks."

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