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Brussels, |
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Crowdfunding
The European Commission is actively working to foster the growth of the crowdfunding sector in the EU, recognizing its potential as an alternative financing source for businesses and an investment opportunity for individuals. The goal is to streamline the operation of crowdfunding platforms across the EU and enhance investor protection.
Challenges in the EU Crowdfunding Market:
The Regulation on European Crowdfunding Service Providers (ECSP) for business:
Benefits of the New Regulation:
In summary, the EU's efforts through the ECSP Regulation aim to unlock the potential of crowdfunding, making it a more viable and safe option for financing businesses and offering investment opportunities across the EU. This initiative reflects a significant step towards integrating and enhancing the EU's financial market in the digital age.
Challenges in the EU Crowdfunding Market:
- The EU market for crowdfunding is relatively underdeveloped compared to other global economies.
- Diverse licensing requirements and a lack of uniform rules across EU member states have historically hindered cross-border operations of crowdfunding platforms.
- High compliance and operational costs have impeded the scalability of crowdfunding services, limiting financing options for small businesses and reducing investment choices for cross-border investors.
The Regulation on European Crowdfunding Service Providers (ECSP) for business:
- Adopted as Regulation ((EU) 2020/1503, it establishes uniform rules for investment-based and lending-based crowdfunding services related to business financing.
- The regulation allows crowdfunding platforms to obtain an EU passport based on a single set of rules, enabling them to operate across the EU with a single authorization.
- This unified approach is expected to facilitate the expansion of crowdfunding services, providing companies with alternative avenues to bank financing.
- Commission Delegated Regulation (EU) 2022/1988 of 12 July 2022 extending the transitional period for continuing to provide crowdfunding services in accordance with national law as referred to in Article 48(1) of Regulation (EU) 2020/1503 of the European Parliament and of the Council.
Benefits of the New Regulation:
- For Companies: Increased access to innovative forms of finance.
- For Investors: An aligned and enhanced investor protection framework, which includes:
- Clear rules on information disclosures by project owners and crowdfunding platforms.
- Governance and risk management rules for crowdfunding platforms.
- Strong and harmonized supervisory powers for national authorities overseeing crowdfunding platforms.
In summary, the EU's efforts through the ECSP Regulation aim to unlock the potential of crowdfunding, making it a more viable and safe option for financing businesses and offering investment opportunities across the EU. This initiative reflects a significant step towards integrating and enhancing the EU's financial market in the digital age.
