Tuesday, 4 July 2023, Berlin. The 11^th CrowdTuesday hosted by Dentons, the law firm, in the heart of Berlin had EUROCROWD members and guests from Germany and abroad discuss the opportunities ECSPR, MiCA, and the DLT Pilot Regime will bring to the market. On top, and maybe most importantly, diversity in alternative finance in all aspects was tested and the sector was asked to proactively challenge its status quo.

The event opened with a keynote by INATBA Board member Mariana de la Roche Wills, Senior Regulatory Affairs Expert at IOTA, on the current state of crypto asset regulation in Europe, starting from MiCA, she covered a broad range of other regulatory efforts that are currently being worked on within Europe and worldwide. She stressed the importance of small and medium-sized industry actors being involved in expressing concerns and seeking to support the policy-making process. INATBA has been playing a key role in shaping the crypto asset regulation and EUROCROWD has collaborated with the organisation in due course where overlaps with ECSPR occur.

The following panel discussed the opportunities and hurdles ECSPR has brought to the crowdfunding sector in general and in particular in Germany. The panel consisted of Constantin Fabricius, Digital Lending Association, Christopher Graetz, Invesdor, Nora Szeles, Tokeportal, and Stig Van Peer, Winwinner. In a partly controversial discussion, covering both the flexibility of ECSPR and regulatory competition, the panel agreed that the German implementation of ECSPR seemed to have stymied the local sector. To date, only two German actors have been licensed under ECSPR, only one of which by the German regulator. However, none of the participants saw the German liability clause as an excluding hurdle for the market, just as a delaying factor. Indeed, there are already public offers under ECSPR in Germany.

The panel suggested that Germany, while a large economic opportunity, did not have to be the first target market for non-German platforms as the existing local market was unlikely to capture significant market share either inside or outside of ECSPR. Comments from the audience second this point, when other European players suggested they had taken Germany off their priority list to focus on other markets with more welcoming interpretations of ECSPR until the German government would address the issue in the long-awaited but slightly delayed Future Finance Law (Zukunftsfinanzierungsgesetz). The loss is on German investors and SME, as EU licensed crowdfunding platforms seek out other markets first.

Next up followed a presentation by Nikolina Romana Milunovic of Mut:Republik on diversity in alternative finance. While there has been no relevant qualitative data on this topic, anecdotal evidence shows that the alternative finance sector is not reaping the full benefits of integrating a diverse workforce. The discussant showed that by integrating diverse staff on the basis of what they can do rather than what degree they may hold or what background they have, it is possible to leverage personal knowledge toward improved business performance and culture.

Examples of how larger corporations have been trying to tackle the issue cannot be blueprints for small- and medium-sized businesses but can outline the opportunities and individual steps. An intervention from the floor showcased in a personal experience the importance of respect and acceptance for persons with diverse backgrounds and the challenges that might occur for individuals and organisations where unclear legal situations may lead to a lack of respect and des-integration, damaging the internal business culture and overall staff motivation.

The last panel of the CrowdTuesday, followed up from the introductory keynote, addressed challenges within the digital finance sector by discussing MiCA, DLT Pilot Regime, Tax, and other aspects from an operational and market participants' point of view. The discussion was moderated by Hagen Weiss of Dentons and led by Mariana de la Roche of IOTA, Max Heinzle of 21Finance, and Nicole Lucks of Dentons. The panel showcased how the current legal proposals and frameworks were creating significant opportunities within Europe and are attracting market players from other legislations to consider relocation. Examples of the innovative possibilities within these frameworks were outlined and showcased – and unlike with ECSPR – the German regulator BaFin was painted as progressive and approachable.

The panel outlined the speed with which digital innovation was changing certain parts of the financial services sector with distributed ledger technology. For example, under the current DLT Pilot Regime, some market participants were able to temporarily circumvent limiting regulatory hurdles and execute innovative services by tokenising assets and enabling faster and smoother financial service execution than under incumbent offers. However, it also became clear that much of the market activity remained for now outside the regulated framework and that the transition will create significant new hurdles, apart from compliance issues, especially the none aligned tax framework and reporting requirements will likely provide more complexity than needed.

The overall discussion also clearly showed that the different legislative frameworks remain also complementary and are expected to lead to larger benefits in rolling out innovative financing with tradeable securities, loans, and crypto assets. Some participants expressed a clear strategy for combining ECSPR with rules designed for crypto assets to expand their services.