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Finance

Crowdfunding

The European Commission is working to help investors and businesses seize the potential of crowdfunding and make it easier for platforms to offer their services EU-wide.

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 the lack of common rules and diverging licensing requirements 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

  1. 10 November 2023
    NEXT 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 has been extended to 10 November 2023 through the adoption of a Commission Delegated Act.

  2. 10 November 2021
    Legislation

    The rules set by the Regulation on European Crowdfunding Service Providers (ECSP) for business entered into application, applying directly across the EU.

  3. 8 March 2018
    Legislative 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.

  4. 16 December 2017
    Report
  5. 4 May 2017
    Report
  6. 27 March 2014
    Communication
  7. 3 October 2013
    Consultation

    Consultation on crowdfunding in the EU launched by the Commission to explore the added value of potential EU action.
    End date: 31 December 2013.

Relevant legislation