Crowdfunding or Crowdphishing?

Since its development in China, crowdfunding has shown a positive image to the public. Regions across China have started improving the environment around them through crowdfunding.

The SEC s new rules for crowdfunding are complex, because they address a complicated problem. The concept underlying crowdfunding is the dispersal of information across millions of people.

According to the research firm Massolution, the crowdfunding market has grown exponentially, from 880 million in 2010 to 16.2 billion in 2014. Global crowdfunding volumes are expected to double this year, surpassing 34 billion.

Han Jianyu, general manager of Xf.cc, said that Xf.cc is engaged in the establishment of a crowdfunding system. A staff member of the company has also raised funds through crowdfunding on WeChat after his family members were attacked by a disease.

True crowdfunding, or equity crowdfunding, refers to the activities of online platforms that sell shares of startup companies directly to large numbers of small investors, bypassing traditional venture capital or investment banking. The concept is analogous to that of online auctions.

It is boundless. If you need and are brave enough to initiate crowdfunding, everything will become possible.

Not long ago, the parents in a residential quarter in Nan'an city launched a reading room for their kids through crowdfunding.

In addition to reading rooms, crowdfunding has also brought some warmth to left behind children, a grave problem facing China now.

What I want to say here is that crowdfunding is not only an industry, but also a positive attitude and an accommodating spirit.

It seems that launching reading rooms for kids, building homes for left behind children, as well as other meaningful things alike can only be managed through crowdfunding.

As an emerging industry in Internet finance, crowdfunding is gradually extending its advantages to all aspects. It has not only changed our living environment, but also silently changed our ideas.

Regulators outside the US have often been more accommodating, and some crowdfunding platforms are already operating. For example, Symbid in the Netherlands and Crowdcube in the United Kingdom were both founded in 2011.

Some of the SEC rules do work against deception. Notably, crowdfunding platforms must provide communication channels through which investors can communicate with one another and with representatives of the issuer about offerings made available.

Peer to peer lending and crowdfunding already represent new ways of matching borrowers with investors. Clearly, issues relating to liability and insurance will have to be addressed in all sharing economy models, especially financial ones but these are hardly insurmountable obstacles.

The 2012 US legislation that tasked the SEC with rulemaking for crowdfunding platforms specified that no startup can use them to raise more than 1 million a year. This is practically worthless in terms of limiting the scope for deception.

For the financial system as a whole, success ultimately depends on trust and confidence, both of which, like suspicion and fear, are highly contagious. That s why, if crowdfunding is to reach its global potential, crowdphishing must be prevented from the outset.

There is a conceptual barrier to understanding the problems that officials might face in regulating crowdfunding, owing to the failure of prevailing economic models to account for the manipulative and devious aspects of human behavior. Economists typically describe people s rational, honest side, but ignore their duplicity.

But achieving it is not in no small part because Europe's heavy reliance on bank finance stems from structural and cultural factors. And the remedies that the Commission has suggested so far for example, encouraging crowdfunding and standardizing the terms of securitization appear unlikely to promote rapid growth in non bank finance.