What the EU is doing and why
The EU market for crowdfunding is underdeveloped compared with other major world economies. For many years, one of the biggest hurdles faced by crowdfunding platforms seeking to offer their services across borders has been diverging licensing requirements and the lack of common rules across the European Union. This has resulted in high compliance and operational costs, which prevented crowdfunding platforms from efficiently scaling the provision of their services. As a result, small businesses had fewer financing opportunities available to them and investors had less choice and faced more uncertainty when investing cross-border.
The Regulation on European Crowdfunding Service Providers (ECSP) for business ((EU) 2020/1503) lays down uniform rules across the EU for the provision of investment-based and lending-based crowdfunding services related to business financing. It allows platforms to apply for an EU passport based on a single set of rules, which makes it easier for them to offer their services across the EU with a single authorisation.
The new rules are expected to increase the availability of this innovative form of finance, which will help companies seeking alternatives to bank financing. Investors on crowdfunding platforms, meanwhile, will benefit from an aligned and enhanced investor protection framework, based on
- clear rules on information disclosures for project owners and crowdfunding platforms
- rules on governance and risk management for crowdfunding platforms
- strong and harmonised supervisory powers for national authorities overseeing the functioning of crowdfunding platforms
Policy making timeline
- 10 November 2023NEXT STEP - Deadline for authorisation
Existing crowdfunding platforms with prior authorisation under national rules had to receive authorisation under the new regulatory framework by 10 November 2022. In order to accommodate a smooth transition into the new regime and ensure continuity of services, this transitional period was extended to 10 November 2023 through the adoption of a Commission Delegated Act.
- 10 November 2021Legislation
The rules set by the Regulation on European Crowdfunding Service Providers (ECSP) for business entered into application, applying directly across the EU.
- 20 October 2020Legislation
- 8 March 2018Legislative proposal
Commission proposal for a regulation on European crowdfunding services providers.
The proposal will make it easier for crowdfunding platforms to offer their services across the EU.
The initiative was part of the European Commission’s fintech action plan and the mid-term review of the capital markets union action plan.
- 25 January 2018Study
- 16 December 2017Report
Report on dentifying market and regulatory obstacles to crossborder development of crowdfunding in the EU by the European Crowdfunding Network and Osborne Clarke Germany.
- 30 October 2017Inception impact assessment
- 4 May 2017Report
Report on assessing the potential for crowdfunding and other forms of alternative finance to support research and innovation by the Directorate-General for Research and Innovation of the European Commission.
- 3 May 2016Report
- 4 November 2015Study
- 27 March 2014Communication
- 3 October 2013Consultation
Consultation on crowdfunding in the EU launched by the Commission to explore the added value of potential EU action.
End date: 31 December 2013.
- Text of the ECSP Regulation ((EU) 2020/1503)
- Summary of the legislation: European crowdfunding service providers for business
- Legislative proposal for an EU framework on crowd and peer to peer finance
- Original legislative proposal for the ECSP Regulation
- Impact assessment accompanying the legislative proposal for the ECSP Regulation
- Executive summary of the impact assessment accompanying the legislative proposal for the ECSP Regulation