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BLOCKLOAN, a new blockchain-based marketplace lender headquartered in Sydney, has announced that venture capital fund Xplora Capital has purchased $1.35 million in tokens, as it continues its mission to provide “transparent, easy to understand, [and] real-time” access to personal finance on a global scale at more competitive rates than the banks.
Described as “banking-as-a-platform on blockchain”, BLOCKLOAN offers personal crypto-fiat loans; crypto equity margin lending and collateralised crypto loans; digital wallets, and debit cards for borrowers to access crypto funds.
The fintech said that by using cryptocurrency-backed loans on a global P2P lending marketplace, it aims to eliminate the “unnecessary” fees associated with traditional lending, while promising end-to-end loan origination, matching and management through the use of pooled smart contracts and an automated KYC and credit risk engine.
“This model switches the power away from lenders to a more equitable model where lenders [and] brokers bid against each other for the right to meet the consumer’s loan or deposit needs,” BLOCKLOAN said in a whitepaper.
The BLOCKLOAN platform reportedly uses traditional, non-traditional and artificial intelligence-driven credit scoring to facilitate more efficient, borderless lending.
It is also designed to be “agnostic to the source of funds and has a flexible product interface allowing different lending products to leverage the underlying crypto lending infrastructure”, the fintech stated in its whitepaper.
The platform has been founded by the team behind financial product marketplace Lodex.co, Michael Phillipou and Bill Kalpouzanis. The Lodex marketplace reportedly has more than 40,000 members and over $400 million in loans auctioned since launching in the middle of 2017.
BLOCKLOAN said it would be forming “country-specific partnerships to minimise defaults and manage collections”.
Mark Finch, managing director of Xplora Capital, which invests in blockchain-based solutions, commended BLOCKLOAN’s roadmap for improving access to finance globally.
“The ability to provide digital peer-to-peer investment and lending through smart contracts using blockchain will only provide the public better forms of credit with less fraud and better rates,” Mr Finch said.
BLOCKLOAN has not yet launched to the public, though customers can apply to join the whitelist.
Given crypto lending is still in its early stages and not well understood by regulators, the fintech noted the risk that regulators in different jurisdictions will initiate investigations, pass restrictive laws, or issue injunctions, among other actions that could impact its progression.
The pace at which technology is advancing in the financial sector, with recent developments including initial coin offerings, cryptoloans, and real-time payments and settlements, has been widely cited as a challenge for regulators. This is because the risk of regulatory failure increases in line with how far regulators are behind the products and services in the market.
As such, the Australian Securities and Investments Commission (ASIC) recently announced joining 11 other regulators worldwide to consult on the proposed creation of a new Global Financial Innovation Network (GFIN), which would act as a global fintech “sandbox”.
The working group – which includes ASIC, the UK’s Financial Conduct Authority (FCA), the United States Consumer Financial Protection Bureau (CFPB), and the Ontario Securities Commission (OSC) – has launched a consultation on the mission statement for the GIFN, its proposed functions, where it should prioritise activity, and the role the collaborative body should play in delivering its objectives, including the tools it will use.
The GFIN consultation paper stated that there is “sufficient merit” to continue exploring the idea of introducing a global fintech sandbox, given the onslaught of products and services that watchdogs are trying to manage the risks of within their own regulatory frameworks.
“Innovations that do not fit within the existing regulatory framework could benefit from this function,” the working group noted in its consultation paper.
“Likewise, it would provide regulators an opportunity to observe emerging business models and technology up close to help inform policy and supervisory work.”