How does Zidisha handle compliance with SEC regulations around issuing securities? I know that both LendingClub and Prosper had to go through a lengthy process to offer their notes with proper documentation and disclosures.
Zidisha is registered as a 501(c)(3) nonprofit only, and does not have a securities license. For this reason, our terms of use do not offer lenders any guarantee they will be able to withdraw repaid loan funds. Legally, Zidisha lending accounts are not financial assets, and any payouts to lenders are treated as voluntary promotional payments offered at Zidisha's sole discretion. That is one more reason we try to keep the emphasis on philanthropic impact, rather than the financial aspect of the loans.
If the SEC ever decides to shut you guys down for operating without a securities license, would lenders lose their ability to withdraw their own money (i.e. to make one of those "voluntary promotional payments offered at Zidisha's sole discretion")?
