Arthur Cox Q&A: EU Crowdfunding Regulation

The new EU Crowdfunding Regulation will apply across the EU from 10 November 2021 to providers of two key types of crowdfunding: investment-based crowdfunding, and peer-to-peer lending. Activity is ramping-up in advance of that date, with ESMA launching its Q&A and publishing a Consultation Paper on a number of Level 2 technical standards. This Q&A explores some key elements of the new regulatory framework for providers of crowdfunding services (CSPs).

Why has a new regulatory framework been introduced?

The European Commission's March 2018 FinTech Action Plan highlighted the need for a harmonised EU-wide regulatory regime for CSPs.

SMEs and start-ups can find it difficult to access traditional sources of finance and, as the economic impact of the COVID-19 pandemic on businesses becomes clear, the need for diversified funding options has become more pressing.