Legal Measures On The Prevention Of Chinese P2P Internet Loan Risk

P2P network loanindustry has joined the Internet finance family for only fewyears. From the first network loans platform “Paipaidai” came online in2007to now,this industry has developed fast. Whether from the number of the platform ortransaction amount, it is rising sharply. But with the rapid development of thisindustry, problems began to appear, such as internet fraud and platform collapse.P2P network loan is a mode which brings the traditional lending transactions tothe Internet. Online transactions must be completed through a kind of medium,which we called the platform. This paper argues that the platform should be amedium only, it is forbidden to join the borrowing and lending transactions, it onlyprovides service. From the structure of the transactions, we can find that there arethree principals, whichare the borrower, the investor and the platform. The investorslend their funds to the borrower and the platform offers service. The P2P networkloan industry has something in common with other industries, such as the P2Bindustry and the Crowdfunding industry. And with the development of this industry,some special products appeared, we take the “Project Rainbow” and the “Projectfireball” as examples.As to the regulation risk of P2P network loan, because there are many investorslending their funds to only one borrower, it may involves the illegalfund-raisingproblem, which attracts much attentions of all people related. This paperargues that the P2P network loan is a king of illegal fund-raising behavior, but nowit is not forbidden. When the China Banking Regulatory Commission (CBRC)promulgates the regulations, P2P network loan may be exempted from illegalfund-raising.As to the transaction risk of P2P network loan, there are three basic principals,the borrower, the investor and the platform, some structures have guarantees andtrustees also, they have their own rights and obligations. There are several risks intransactions, such as borrower default and account risk and others. To avoid risks,measures must be taken, such as improve the credit rating, use guarantee and build risk reserve institution.In the aspect of Supervision, there is not a system yet. A few days ago, theCBRC has announced that inclusive finance department will supervise the P2Pnetwork loan industry, but regulations are not published. Besides,self-regulation,Internal managementand social supervision institution must be build.Even though there are many problems and risks in this industry, the P2Pnetwork loan industry will come into order one day, this day is coming soon.