The European Commission has adopted a proposal for a Regulation on European Crowdfunding Service Providers, enabling crowdfunding platforms to offer their services across the EU. Furthermore, the proposal intends to provide legal certainty for investors.
Crowdfunding is an innovative funding method and seen as an alternative to bank lending, which is often difficult to access for small businesses and start-ups. Financial support is being collected from a large number of investors, mostly through an online crowdfunding platform.
Crowdfunding is currently being regulated by national legislation of Member States. However, the diverging national rules make it difficult for crowdfunding platforms to expand and offer their services across the EU. Therefore, small businesses and start-ups are frequently not able to raise money from a larger number of potential investors throughout the EU.
The Commission’s proposal applies to crowdfunding services relating to non-consumer crowdfunding projects with a size of up to EUR 1 million whereby investors receive a financial return for their investment. Through an optional EU regime, crowdfunding platforms will be able to obtain a one-stop-shop access to the EU market and operate under the same rules and offer their services across the EU thereby removing the need to comply with different national rules. The proposal also envisages to protect investors, for example by introducing a ‘knowledge test’, which investors have to take before being able to invest.
Next to the proposal for a Regulation, the Commission has also adopted a proposal for a directive amending Directive 2014/65/EU (MiFID II). In order to ensure effective supervision, a person authorised as a crowdfunding service provider under the Regulation on European Crowdfunding Service Providers (ECSP) for Business, should not be required to be authorised under MiFID II, and vice versa.
Both proposals can be found here.