The North American Securities Administrators Association (NASAA) is scrutinizing peer-to-peer lending.
NASAA is the association and lobbying group that represents state and provincial regulators in North America.
NASAA has issued a proposal on P2P lending and is seeking public comment on the Statement of Policy Regarding Peer-to-Peer Lending.
NASAA’s proposal seeks to create a framework for lending platforms to register securities they issue to investors. NASAA states that online lenders that accept individual investors to fund loans “may face significant risks of loss and must heavily rely on the lending platform to help mitigate those risks.”
Melanie Senter Lubin, NASAA President and Maryland Securities Commissioner, said the intent is to set “specific registration and qualification standards for securities offerings involving peer-to-peer lending.”
“I wish to thank the members of NASAA’s Corporation Finance Section and Corporation Finance Policy Project Group for their work in developing this important statement of policy.”
Andrea Seidt, NASAA’s Corporation Finance Section Committee Chair and Ohio Securities Commissioner, stated:
“NASAA developed this statement of policy to set some ground rules for peer-to-peer lending relationships and to help investors in such relationships become better informed. If adopted, the policy would ensure that lending platforms properly vet borrowers, facilitate loans, enforce repayment and otherwise set and enforce the terms of these instruments.”
Today, there are few traditional P2P lenders creating a marketplace for these loans. LendingClub, once the largest P2P lender in the US, exited retail notes around the time it purchased a digital bank. Most P2P lenders only accept accredited investors on their platform, thus catering to a more sophisticated investor. If the NASAA initiative ends up creating a new regulatory approach within the US, or at least in certain states, the added cost of compliance could challenge the sector. It is not immediately clear if there was a catalyst that compelled NASAA to pursue a regulatory framework for P2P lenders.
The deadline for submitting comments on the proposal is April 21, 2022.
The Statement is available here and below.