Developments in Crowdfunding
Crowdfunding is a newly emerging financial service that is undergoing many interesting developments. There is currently no specific supervisory regime, either on the national or the European level, in relation to crowdfunding. This means that, on the one hand, the sector encounters various obstacles due to unresolved legal issues and, on the other hand, that the supervisor cannot fulfil its duties optimally. Hence, the amount of attention that currently is given to crowdfunding on the national and European level.
On the 19th of December 2014, the AFM published a rapport on Crowdfunding called “Crowdfunding- Naar een duurzame sector. Onderzoek naar (toezicht op) de crowdfundingsector”(link, in Dutch). The AFM identifies possible pitfalls in the current supervisory framework and makes several suggestions to amend them.
In December 2014, the European Crowdfunding Network (ECN) has published a report called “Review of crowdfunding regulation. Interpretations of existing regulation concerning crowdfunding in Europe, North America and Israel” (link). This report describes existing or forthcoming regulation of certain European countries as well as a few countries outside of the Euro zone.
On December 18th 2014 The European Securities and Markets Authority (ESMA) published an advice paper (link) and an opinion (link) on investment-based crowfunding. ESMA hopes to provide national competent authorities clarity on how crowdfunding business models fit within the existing regulatory framework. In the opinion paper it outlines how existing EU rules are likely to apply to crowdfunding platforms. It also provides guidance to national regulators on the key risks inherent to crowdfunding and the key components of a regulatory regime to address them. In the advice paper it highlights the concern that strong incentives currently exist for crowdfunding platforms to structure their business models to fall outside the scope of regulation.