European Parliament adopts EU rules for crowdfunding platforms under ECSP
Brussels, 5 October 2020. Following eight years of dedicated policy work by the European Crowdfunding Network and its members, we are very happy that the European Parliament has adopted the latest text for the European Crowdfunding Service Provider for Business Regulation. as well as related changes to Markets in Financial Instruments Directive (MiFid).
The European Crowdfunding Network wholeheartedly welcomes the new Regulation for European Crowdfunding Service Providers. We believe it has the potential to make pan-European crowdfunding a reality, and that doing so will be of huge benefit to European start-ups and SMEs and to European investors.
The crowdfunding industry is scaling up in volumes and consolidating in terms of partnerships with institutional investors and investment funds. These trends have the potential to unlock further capital for European start-ups and SMEs, and we hope that the implementation of ECSP will further facilitate these initiatives.
The full benefits of an harmonised EU regime for crowdfunding operators can only be achieved if ESMA and national regulators cooperate closely among them and with the EU crowdfunding industry as a whole. The foreseen 12 months transition period will be key for a smooth implementation of ECSP in every Member State, and therefore to achieved the desired outcomes for all market operators and beneficiaries, from both investors and companies’ perspectives.
In the meantime, the text has been published in the Official Journal of the European Union. The regulation will apply one year after publication in November 2021, with the European Commission still defining some regulatory standards with input from the European Security and Markets Authorities (ESMA) and the European Banking Authorities (EBA).
The harmonised rules will help crowdfunding to function more smoothly across the EU and to support cross-border funding, by providing for a single set of rules on crowdfunding. It will apply to all ECSP regulated crowdfunding platforms for offers of up to EUR 5m, calculated over a period of 12 months per project owner. There are however certain areas in which Member States will still have the power to make adjustments in due course.
A crowdfunding platform seeking approval under ECSP would need to request authorisation from the national competent authority (NCA) of the member state in which they are established, but will be able to provide their services cross-border into other EU member states. Supervision will remain with national competition authorities, while the European Securities and Markets Authority (ESMA) will facilitate and coordinate cooperation between member states.