- carrying out a study to explore market developments and the potential of crowdfunding to finance research and innovation;
- raising awareness, providing information and training modules for project owners, especially for 'financial return' crowdfunding (crowd lending and crowd investing);
- establishing an expert group, called the European Crowdfunding Stakeholder Forum, that will advise the Commission on some of the above actions. In particular, the Expert Group should provide advice to the Commission to explore the potential of establishing a “quality label” to build trust with users and provide expertise to the Commission in promoting transparency, best practices and certification;
- assessing the possibilities for using public funds to support projects through crowdfunding;
- holding regulatory workshops with national regulators to discuss obstacles to the convergence of national regulations on 'financial return' models and, where relevant, issuing recommendations to encourage Member States to avoid inconsistencies in national approaches, and to monitor the market and legal developments and regularly assess whether further EU action is needed.
The European Crowdfunding Network (ECN) has been, since 2012, lobbying with the EC to help advise and influence policy developments and regulation reviews. The ECN has reviewed the communication as being “fully in line with our previously announced expectations and requests to the European Commission.” The group will continue to work with the EC and will concern themselves with making sure that policies are timely and implemented effectively.
Though this is a great step forward in the European Crowdfunding sector, it was announced in November that, on the European level, there would be no further additional regulations for the time being. This decision will positively impact the market’s establishment of best practices and development. It will also allow provision and encouragement for EU members that have not taken advantage of crowdfunding to do so within their own national boundaries. Having said that, the lack of emphasis on regulation will potentially make national regulations incompatible across the EU, causing uneasiness for investors, SMEs and startups, and the platforms themselves.
The ECN has published several scenarios:
- UK and Spain may have a reduction in crowdfunding innovation, in the worst case scenario as there are hurdles for market entry and the customer is heavily protected by law.
- France will be expected to have a vibrant crowdfunding scene, because the French government has proposed promising regulations.
The EC will continue to monitor the developments of the industry, and consider if further regulatory actions should occur to limit national fragmentation from the single EU market. In order for the EC to make more proper and well informed decisions and regulations, and informal expert group on crowdfunding will be established.
Crowd Valley is proud that one of our founding and board members is part of the Access to Risk finance expert group, assisting in advising the Commission on a broad range of issues encompassing the design and implementation of debt and equity financial instruments, target groups, SME participation and other cross-cutting issues.
ENC Admin. (2014) European Commission announces help for Crowdfunding. Europecrowdfunding.org
Alois, J. (2014) European Commission Creates Expert Group on Crowdfunding. Crowdfundinsider.com
ECF. (2014) Communication on Crowdfunding in the European Union. Efc.be
Photo Credit: Blu-news.org
Jasmien is currently studying a bachelors in Business Studies from Cass Business School in London while interning at Crowd Valley. Originally from Belgium, she grew up in Switzerland, Ethiopia, USA, and Japan.
She is very passionate about the start-ups, entrepreneurship, technology, and travelling; she aspires to one day become an entrepreneur.