Startups and P2P lenders are reportedly turning to provide crypto-loan service in the recent sluggish economy. Investors who are urgent for cash could borrow 50%-70% of the total bitcoin value.

The past few months saw a spate of P2P platform collapses in China because of tightened regulation and a liquidity crunch, which led to hundreds of thousands of small investors across the country losing their family’s life savings.

As the sluggish economy, including brick-and-mortar business, stock market and crypto market, continues, many who are in urgent need of cash are looking for solutions.

These frustrated P2P lenders, inspired by the buzziest topic in finance and tech – cryptocurrencies, are making a comeback and marching into the crypto space by providing P2P crypto-proved loans, according to industry insiders.

As of this moment, a bitcoin is still worth $6,448 in the bear run. For those who hold bitcoin or other mainstream cryptos and hope to hold onto the coins as a long-term investment, cashing them when they are in need would mean losing on potential future returns.

This is where crypto lenders step in. “BTC and ETH are accepted for loans at low cost. To meet your urgent need for cash,” advertised in the WeChat moment of a P2P founder who has apparently started a new business.

Leveraging crypto loans, P2P lenders under tightened pressure could easily bypass the country’s regulation that the annual percentage rate (APR) of personal loans shall be 36% at most. Internet financial startups are also eyeing on this business still in the gray zone.

“This is exactly what the market needs, especially in the bears. When the price of cryptos is low, investors are reluctant to sell them off. Once they are short of money, they have to turn to such platforms.”

There are currently about 20 firms engaged in crypto loans in the market, only BTC and ETH are accepted at present. Usually they lend 50%-70% of the total bitcoin value depending on the market. Suppose the borrower wants a loan of $100, he has to pledge $200 worth bitcoins; when the pledged bitcoin falls 30% in value, the platform will send warning to borrowers and when it drops by 40%, the account will be closed out.