Recently, the Knesset approved an amendment to the Supervision
of Financial Services Law, which regulates the activities of online
lending platforms that broker between people and businesses under a
peer-to-peer (P2P) model.
Innovative fundraising models have emerged as part of the
emerging crowd economy, including a P2P model that provides an
online connection between borrowers and lenders for the purpose of
engaging in a credit transaction. The platforms connecting
borrowers with lenders are aiming to reduce the brokerage fees
being charged by institutional financial institutions (such as
banks and and institutional lenders), open opportunities for
lenders to benefit from innovative investment alternatives, and
provide opportunities for those in need of a loan to find
alternative and often less expensive sources of credit. These
platforms are essentially challenging and disrupting the
institutionalized financial system.
