European Commission Releases Proposal To Regulate Crowdfunding

On March 8, 2018, the European Commission ("Commission") released a new proposal ("Proposal") to regulate crowdfunding service providers ("CSPs") as part of its Fintech Action Plan (summarized in our recent post).

CSPs can provide businesses and individuals with a digital platform to reach out to potential investors for funding. Presently, some EU countries have their own national legislation on crowdfunding while others require CSPs to be licensed and operate under EU frameworks such as the Markets in Financial Instruments Directive (MiFID II), the Payment Services Directive (PSD) and the Alternative Investment Fund Managers Directive (AIFMD).

The impetus for the Proposal stems from the fact that divergent national laws on CSPs, in the absence of a coherent, European-wide regulatory framework, may hinder the ability of CSPs to scale their operations across the EU. The Proposal aims to fill this void with the goal of reducing the financial and administrative