Previously, the peer-to-peer lending industry was lightly regulated. As a novel idea, P2P loans were largely exempt from the regulations and consumer protection laws that applied to personal loans issued by banks and credit unions. However, that has changed. The U.S. Securities and Exchange Commission (SEC) labeled P2P loans as securities, and therefore they have to be registered with the FEC to comply with federal securities laws.  This imposed a significant burden on lenders in terms of reporting and registration. For many, it became too difficult to implement, and many P2P lenders closed.  Of the P2P lenders that continued to operate, most have moved away from working with individual investors and instead only utilize institutional investors. That’s partially because of increased regulation, and also because it’s harder for a P2P model using individual investors to reach high loan volumes.