The European Commission has published a proposal for a Regulation on European crowdfunding services providers.
The legislative proposal for a European crowdfunding regime is not intended to interfere with national bespoke regimes or existing licences, including those under MiFID II, the PSD2 or the AIFMD, but rather to provide crowdfunding service providers with the possibility to apply for an EU label that empowers them to scale up their operations throughout the EU under certain conditions. Under the proposal, a crowdfunding service provider can choose to either provide or continue providing services on a domestic basis under applicable national law or seek authorisation to provide crowdfunding services under the proposed Regulation. In the case of authorisation under EU rules, authorisation covers both the provision of services in a Single Member State and on a cross-border basis. If the provider chooses to apply the EU rules, authorisation under the applicable national rules is withdrawn.
The draft Regulation applies to those crowdfunding services entailing a financial return for investors. The financial return model is either investment-based crowd funding, consisting of transferable securities (shares and bonds) issued by the company that raises funds, or it is lending-based crowdfunding consisting of entering into a loan agreement. Reward and donation based crowdfunding fall outside the scope of the draft Regulation.
The European Securities and Markets Authority (ESMA) will be in charge of authorising and supervising crowdfunding service providers. ESMA is given powers to perform controls, investigations and on-site inspections in order to effectively perform on-going supervision.
The Commission has also published a draft Directive amending MiFID II. The draft Directive explicitly specifies that MiFID II does not apply to persons authorised as crowdfunding service providers as defined in the draft Regulation.
The legislative proposals will now be discussed by the European Parliament and the Council.