As part of its efforts to improve access by investors and businesses to new financing sources, the European Union is setting out a new regulatory framework for the operation of crowdfunding platforms.
This new framework aims to make it easier for crowdfunding platforms to provide their services across the EU. It harmonises the minimum requirements on these platforms when operating in their home market and other EU countries. The proposal also increases legal certainty by harmonising investor protection rules.
"The expansion of digital tools is driving financial innovation and the development of new, easy alternatives for start-ups looking for accessible funding sources. As regulators, we need to encourage this expansion while guaranteeing a safe environment for consumers and investors," said Eugen Teodorovici, minister of finance of Romania
The Council position:
- removes barriers for crowdfunding platforms operating cross-border;
- provides tailored rules for EU crowdfunding businesses depending on whether they provide their funding in the form of a loan or an investment (through shares and bonds issued by the company that raises funds);
- provides a common set of prudential, information and transparency requirements to ensure a high level of investor protection;
- defines common authorisation and supervision rules for national competent authorities.
The proposal covers crowdfunding campaigns of up to EUR 8m over a 12 month period as a general rule. Where member states have decided to set the threshold for prospectus obligations below this figure, they should be able to prohibit the raising of capital for crowdfunding projects from its residents for amounts exceeding that national threshold. Larger operations are regulated by MiFID and the prospectus regulation. Reward- and donation-based crowdfunding fall outside the scope of the proposal since they are not regarded as financial services.