Extension of ECSPR transitional period for services provided in accordance with national law until 10 November 2023
On 12 July 2022, the European Commission has opted to extend the transitional period until 10 November 2023 to all crowdfunding service providers as per Article 48(1) of Regulation (EU) 2020/1503 on ECSP for business provides for a transitional period with respect to crowdfunding services provided in accordance with national law. Nonetheless, the Regulation does not allow further extensions after this date, and existing crowdfunding service providers that have not received authorisation by 10 November 2023 will have to stop temporarily their operations until a license is granted.
This delegate act comes after ESMA’s technical advice from 29 May 2022 to not extend the transition period. The European Commission however concluded after further market review that the risk of disruptions for some large national markets in the crowdfunding industry – especially France, Germany and Italy, is indeed high. The delegate act is now subject to a three months review period.
EUROCROWD believes that the extension will ease the pressure on some platforms in the market but will also create a year of uncertainty and increased risk for retail investors. We remain committed to the fact that ECSPR will be a better licensing regime for the European market and retail investors compared to the mix of current national regimes.
During our annual CrowdCamp conference in Bilbao on 16 and 17 June 2022 the general sentiment was still toward keeping the extension in 2022, but the discussion also clearly showed that in some member states this would have created significant disruptions to the sector following slow adaption of ECSPR by national competent authorities and local market actors. With no further extension possible, under ECSPR operators are free to choose the location of their licensing regime and all service providers will be well advised to use the next 12 months carefully to assess their best options. Choosing a different home state might be more advantageous in terms of taxation and lincensing after all.
Our questionnaire about the authorisation process according to ECSPR was closed on 31 July 2022.