The March 8th announcement laid out plans for an EU crowdfunding license, but how would UK firms fit into this?
The UK Crowdfunding Association (UKCFA) has responded to yesterday’s announcement from the European Commission regarding its 23-step “Fintech Action Plan” and future intentions on regulating the crowdfunding sector.
The plan outlined the creation of an optional EU regime which will provide crowdfunding platforms with a “one-stop-shop” access to the EU single market through a single set of rules and authorisation process managed by the European Securities and Markets Authority (ESMA).
The proposal only applies to those crowdfunding services entailing financial returns for investors, thereby excluding any rewards or donation-based crowdfunding. Consumer lending also falls out of the plan’s scope, as it’s already covered by other EU legislation.
A spokesperson from the UKCFA has today responded to the proposal: “The UKCFA supports the draft Crowdfunding Regulations' optional regime as a positive way for crowdfunding platforms in Member States that have not yet adopted crowdfunding rules to be subject to sensible regulations with the central oversight of ESMA.
“The UKCFA also supports the need for authorisation and the oversight of national regulators under the MiFID and the Prospectus regimes when platforms grow to host fundraises above €1m. The UK Financial Conduct Authority's MiFID based crowdfunding regime has successfully enabled the UK crowdfunding sector to grow while also protecting investors.
“The MiFID and Prospectus regimes are also being updated to accommodate the growth of crowdfunding and the UKCFA advocates that from July 2018, when the new Prospectus Regulation comes into effect, fundraises up to €8m should not require a Prospectus.”
It is not known whether the UK crowdfunding sector would continue to maintain compliance with EU legislation once the UK leaves the European Union.