Bullion Secured Peer to Peer Lending Launches

• Live Offers and Requests
• The P2P Overview Video
• The Press Kit
• P2P Description and advanced P2P features

About two years ago, a distressed customer asked us whether he could obtain a loan from us, he needed funds urgently but he was reluctant to sell his bullion through our storage program.

We had no way to help him at that time, but this request led us onto a long journey to develop a safe way to offer reliable low-interest loans to our storage customers.

This is how we did it:

I -We Skipped the Banks

Having Silver Bullion Pte Ltd offer loans directly to customers was the easiest option but it created two major problems:

• Banking Exposure SB would have needed to obtain funds from a bank or anoother Financial Institution. We have never had debt why start now ?
• Regulatory complexities SB would have needed to become a moneylender, bringing SB closer to becoming a financial institution along with other regulations and restrictions.

After nearly a year’s worth of meetings with banks and lawyers, we dropped this approach for good.

II - The Beauty of Peer To Peer

We realized that SB could be a loan facilitator rather than a lender itself during a meeting when we discussed moneylending laws with a former MAS (Monetary Authority of Singapore) regulator. In essence, SB would:

• let individual customers be lenders, which meant that we would not need to involve banks to obtain funds.
• act only as an agent / platform provider which meant that SB would just be a matchmaker (similar to eBay or AliBaba.com) and we would not need a lending license.

This approach is referred to as a "Peer To Peer" (P2P) system and it is a revolutionary financial technology (FinTech) because it matches lenders and borrowers directly and neatly bypasses banks.

III - Customers get Control

Participation: P2P lending is not classified as a financial service, so we were able to allow participation of S.T.A.R Storage Customers irrespective of residency, salary or net asset requirements.

• Become a Borrower - Choose your bullion collateral and place your borrowing request
• Become a Lender - Send Funds to the P2P account and place your lending offer
• Not be a part of P2P - Do nothing. P2P is an optional service.

Interest Rates: we do not set rates, instead lenders and borrowers determine these themselves via Bid and Ask Listings.

• Interest rates would raise, If there is a shortage of lenders
• Interest rates would fall, if there is a shortage of borrowers
• As agent and custodian SB charges a 0.5% fee each from both the borrower and the lender for the service

IV - The Concept Validation in Cancun

We presented the Bullion Secured P2P Lending at the Sovereign Man organized - Global Investor Conference, in Cancun, Mexico last April. Many of the 370 attendees were existing customers and featured big names such as Robert Kiyosaki, Marc Faber and Jim Rickards (the author of Currency Wars and The Death Of Money).

The feedback was overwhelmingly positive. Attendees liked the market driven interest rates, avoidance of financial institutions and physical bullion backing. We knew we had a good system, and the Sovereign Man Confidential Community confirmed this.

V - First Customer Transactions and Feedback

We released P2P Lending system to a group of excited storage customers, giving us over a month of feedback before public launch to further refine the system and create initial liquidity.

During the first month we closed 35 loans totalling over a million dollars in SGD (USD contracts too) and ended with a surplus of lenders, resulting in rates falling from the initial 6% to 4.25%.

See Summary by Currency and Duration:

You can also view individual transaction in PDF or Excel.

Bullion leasing is a practice whereby an institution leases bullion they own (having legal title to it and it being on their balance sheet) to third parties. The practice becomes questionable when the operators of unallocated or allocated storage systems ,who maintain bullion ownership and relegate storage customers to being creditors, utilize the stored bullion to lease it to third parties for additional income.

This is legal because, in such systems, the storage customer does not own their gold or silver and therefore does not have control of such practices. The customer might receive certificates or statements to document that something is owed to them but at the end of the day these are just liabilities on the real owner's balance sheet.

At Silver Bullion it is impossible, by design, to do such bullion leasing because we always transfer legal title ownership of the bullion to customers. We do this by packing the bullion into uniquely serialized parcels whose ownership is then transferred through a sale invoice.

The invoice is an official document, under Singapore Law, that:

• the ownership of specific serialized parcels was transferred to the new party
• causes the bullion to be removed from our balance sheet
• makes customer bullion leasing impossible as it requires ownership

Our secured P2P Loans gives the bullion owner customer the option to take a loan from another verified customer who has excess cash. It is transparent and under the full control of the customers.

P2P does not make Silver Bullion a Moneylender.

By operating a Peer to Peer Lending system Silver Bullion does not provide loans. Silver Bullion is merely matching lenders with borrowers and providing a framework for this to happen securely while taking a small fee for the service.

Conceptually this is similar to the way E-Bay matches sellers of goods with purchasers. E-Bay does not sell products directly, it merely provides a platform for sales to occur.

Silver Bullion is not a financial institution under Singapore law and our P2P system does not change that. As Silver Bullion is not a financial institution under Singapore law we do not have any transactional reporting requirements to Singapore or any other foreign country.

However, if you are subject to foreign (other than Singapore) tax jurisdictions, you would need to do your own due diligence on whether you need to report eventual interest earned, bullion stored or capital gains taxes if selling bullion to us.

Keep in mind that foreign jurisdiction might have their own rules on what they consider to be a reportable account, whether we are classified as a Financial institution in Singapore or not.

In other words, foreign tax authorities cannot get information from us, but they can place reporting requirements on you

An alternative, typically non reportable but inflexible, storage option is to rent a safe deposit boxes and store bullion inside. See Safe Deposit Boxes at TSH for details.

Silver Bullion has updated its User Agreement as follows:.

• Consolidation and Simplification The old User Agreement, S.T.A.R. Storage Agreement and the various appendixes governing Transfer-ins and DUX have been merged into a single agreement. The consolidation eliminated redundancies, simplified the language and fixed small inconsistencies between the older documents. The result is a single, smaller, and more understandable User Agreement.
   
• P2P Lending was added as an optional service The legal agreement governing P2P loan contracts between Lenders and Borrowers has been added. Just like our other optional services (e.g. Transfer-Ins) these rules only apply if you choose to avail yourself of the P2P Loans.
   
• No removed services or protections We have ensured that there are no substantial changes to our existing terms of services and that the simplified agreement contains no downsides to our customers. On the contrary, we have take the revision opportunity to implement some customer agreement feedback, such as a more explicit statement that all bullion is stored in the Safe House SG.
   

The new agreement, viewable here, has already been vetted by 112 existing storage customers during between late June to early August who have signed the agreement to be early P2P Loan participants.

We believe the new agreement to be a substantial improvement over the old set of agreements and have received positive feedback over the last month from our customers.

Nonetheless, should you have question about any aspect of the new agreement please feel free to contact us at [email protected].