In February 2026, one of several Brussels-based fintech associations and supported by national associations and select market participants, proposed more than doubling the threshold under the European Crowdfunding Service Providers Regulation (ECSPR, Regulation (EU) 2020/1503) from €5 million to €12 million per project. The proposal argues for alignment with the EU Listing Act (Regulation (EU) 2023/1150), which amended the Prospectus Regulation (Regulation (EU) 2017/1129) to facilitate SME funding and streamline regulatory requirements.
This push comes at a critical moment. The EU’s focus on SME finance is intensifying, driven by the need to boost deep-tech investments and scale-up solutions. It also aligns with the broader objectives of the Capital Markets Union and the Savings and Investment Union, both aimed at integrating capital markets and directing more funding toward innovative businesses.
At first glance, the case seems compelling. Give ECSPR licensed platforms equal opportunity, that sound like a quick and easy fix. But a closer look at the regulatory architecture, ESMA’s latest data, and supervisory realities suggests the proposal is premature, and at worst, a distraction from the real issues plaguing Europe’s crowdfunding market.
Why €5 million?
The €5 million cap was no accident. In its initial proposal the EC had put the cap at only €1 million. The increase was a hard fought for, being a deliberate compromise is trying to balance SME access to capital with robust retail investor protection across all 27 member states and their various market realities, regulatory approaches and risk awareness. The compromise on the higher, €5 million cap comes along with ECSPR’s safeguards, risk warnings, reflection periods, the Key Investment Information Sheet (KIIS), and tailored supervisory oversight. All of this is calibrated for smaller, digitally distributed retail offerings.
The EU Listing Act, by contrast, governs prospectus obligations for public capital markets. A simple numerical alignment does not equal harmonisation in this situation. The two regimes serve different purposes, with different risk profiles and investor bases. Raising the ECSPR ceiling without revisiting investor protections would not be a technical tweak, it would be a fundamental shift, with unknown consequences for retail investors.
Moreover, the EU Listing Act raised the prospectus exemption threshold for SMEs listing on public markets from €1 million to €5 million (for equity), aligning it with ECSPR’s existing cap. This change resolved the previous mismatch between the two regimes, but it does not justify raising ECSPR’s threshold further. If anything, the alignment underscores the careful calibration of ECSPR’s €5 million cap for retail crowdfunding, distinct from the public market context.
The data deficit
ESMA’s 2025 report on crowdfunding in the EU offers a clear picture: across 181 platforms in 21 countries, €4.25 billion was raised in 2024. Average project sizes tell the story: Loans averaged €240,000, debt €770,000, and equity €640,000. Nearly half of all projects raised less than €1 million. Nowhere within the public ESMA data there is evidence that the €5 million cap is a binding constraint. The real barriers seem structural: only 8% of funding is cross-border, hampered by national marketing restrictions, platform scalability, and compliance costs. The ESMA data also indicatively suggets that innovation finance is not a leading part, with professional, scientific and technical services/actities representing only one third of total funding in 2024, next to construction and real estate. And finally, to underline the argument of fragmentation, three countries (France, the Netherlands and Spain) together account for nearly three quarters of the total investments under ECSPR in 2024.
Even a Position Paper of said association, published in Q3 2025, does not shed light on the missing data. The paper largely draws on a 2024 survey with responses from 32 unnamed platforms across Europe, or around 13% of todays market, highlights some operational challenges and strategic priorities from an industry perspective. It reflects genuine concerns about scalability or competitiveness. It does not provide any empirical evidence that the €5 million threshold constrains growth, nor does it quantify impacts on investor protection or cross-border activity. The report does not substantively alter the conclusions drawn from ESMA’s market data. And while the 2025 paper pushed for a long list of political demands, the latest letter only focuses on one.
Already with ECSPR today, for transactions that seek more than the €5 million cap per year, larger deals are possible through alternative legislative routes or private fundraising. Of course, there are platforms that reach the €5 million threshold with a number transactions a year. There are also ECSPR platforms that also hold additional relevant licenses, an option clearly carved out within the regulation, to ensure all deal sizes can be served. It remains that the empirical case for raising the threshold is, at best, unproven.
The unanswered questions
Crowdfunding remains a retail-dominated market, by design. Raising the threshold to €12 million would expose retail investors to larger, riskier deals, without any assessment of loss rates, concentration risk, or supervisory readiness. It might also create the potential for regulatory arbitrage or forum shopping. ESMA’s reports do not address how a higher ceiling would affect investor protection or systemic risk. The balance between innovation and investor protection is central to ECSPR. Any change to the threshold should be informed by rigorous data and supervisory analysis. So far, that analysis is missing.
ECSPR has been fully operational for only around 3 years, with the largest share of market participants formally entering the market in 2023 and 2024. The market is defined by fragmentation, lack of transparent data and lack of proof of scale. Revising the regulations core parameters requires a formal legislative process, including impact assessments and Commission evaluation. The current demand to just raise the threshold does not lend itself as starting point for structured regulatory action nor an informed discussion.
With authorities already reviewing ECSPR’s impact, the lack of empirical evidence in the association’s proposal raises real questions: What is the motivation behind it? Is this a serious policy push (unlikely based on the target of the communication), is it a bid for attention (but to whom) or, worst of all, an expression of lack of knowledge? We may never know, but as it stands, the paper seems to present a solution in search of a problem, rather than a fact-based and data grounded argument leading to actions. Much will depend on the ability to deliver adequate follow-up arguments quickly.
Focus on what matters
The proposal to raise the ECSPR threshold to €12 million underscores the tension between industry ambition, fragmented market reality and regulatory vision. While alignment with the EU Listing Act may seem appealing, ESMA data show the €5 million cap is not likely constraining growth in the overall market. Cross-border fragmentation and structural barriers are the real issues as suggested by the data presented by ESMA – after all, the idea of cross-border investments is a key aspect of the political vision within ECSPR, as clearly stated within its text.
Before entertaining any threshold increase, policymakers would do well to demand rigorous impact assessments and focus on resolving the structural barriers that truly hinder cross-border crowdfunding. Without it, raising the threshold risks upsetting the careful balance between access to capital and investor protection that ECSPR was designed to achieve. Given the mixed implementation and performance of the crowdfunding market across EU member states, the Council might be the last place where this proposal finds readership.
If the crowdfunding industry wants to grow, addressing potential regulatory arbitrage (notably in Germany – we will address this in a forthcoming article), market fragmentation, and cross-border integration should take priority over pursuing larger deals that increase retail investor risk.
Any adjustment to the ECSPR threshold should be grounded in robust evidence, including deal-size distribution, investor protection, and supervisory capacity. Strengthening the European crowdfunding market – and strengthened it needs to be – requires resolving these structural barriers, both through the market itself and though regulatory convergence, rather than lobbying for expanded deal sizes prematurely.
What is next?
The debate over the ECSPR threshold is just one piece of a much larger puzzle. The real work lies in addressing the structural barriers, regulatory fragmentation, and investor protection challenges that define Europe’s crowdfunding market today. We are here to turn challenges into opportunities and help stakeholders navigate complexities with tailored solutions. For those looking to actively build the future of crowdfunding in Europe, we offer the expertise and support to make it happen. Reach out to explore how we can support your goals.
