Brussels, 19 December 2019 – After seven years work in Brussels, ECN is happy to see that last night a compromise was reached between the European Parliament and the Council of Europe with regard to the by the European Commission proposed regulation for crowdfunding (ECSP) concerning financial services.
Already in 2017, the EC and the EP helped adjust the prospectus law in favour of Crowdfunding. And, following a diligence analysis of the European Crowdfunding market, in 2018 the EC has taken the courageous step to publish a proposal for regulation for a very young and yet undeveloped market for consideration by the European Parliament and the Council. ECN has helped the parties to gain access to market information and actors across the board, including consumer protection organisations and other stakeholders.
Crowdfunding for business (lending and equity) will in the near future now be regulated on EU level under a harmonised framework. We will see:
- A single set of rules will apply to crowdfunding services in the EU, up to EUR 5 000 000
Strict rules to protect investors from financial losses
- Member states responsible for authorising and supervising crowdfunding providers
The details of the regulation are still to be finetuned, technical work on the text is under way within the three institutions, but European crowdfunding platforms should consider that the framework has been agreed on and should be able to pass further legislative hurdles without significant delay. We expect that the law will come into affect in 2021.
ECN is happy to the outcome and believes that it provides a well structured and positive framework for the sector. We would like to thank all involved actors and members of the European institutions for their hard work, commitment and dedication to quickly find a sound solution.
“As one of the few SME loans platforms operating in several EU Member States, Funding Circle supports and welcomes the preliminary agreement reached by the European institutions on the European Crowdfunding Service Providers Regulation (ECSP). We believe that introducing a truly European alternative finance market will boost access to finance for SMEs by improving choice and competition in the market and reducing dependency on bank lending”, adds Jens Engelmann-Pilger, Funding Circle
The discourse driven process of European legislation has been a key factor in finding the best solution for crowdfunding platforms, we believe. Our own positions have been challenges and questions, but been treated also with relevant consideration. The implementation over the next years will show where adjustments need to be made and we are glad that the compromise includes a review period in order to address any unforeseen hurdles in due course. ECN will be working to help capture relevant market insights.
“October welcomes the compromise on European Crowdfunding Services Provider (ECSP) which will provide an harmonized playing field in all European Member States for Crowdfunding platforms. This will boost the financing of European entrepreneurs to which October is proudly contributing to in 5 European countries. This achievement would not have been possible without a close cooperation of the European Commission, European Parliament and European Council with the ECN and industry,” comments Pascal Ouvrard, October
We would like to thank all those people that have over the years been part of this effort and made a mark to our work. Without each single one of them, we might not have arrived here. There are some who have contributed more than one could have expected, some of which already have left the industry.
Special thanks goes also to our ECSP working group, made up of Funding Circle, Kapilendo, October and Seedrs.