Friday 30th October is going to make into US early stage finance history. The SEC has approved Title III of the 2012 JOBS Act, with 3 votes out of 4, including the Chair’s, Mary Jo White, thus opening online investing to retail investors, that is 91% of savers in the US.
A little more than one year ago the Corporations and Capital Markets Advisory Committee (CAMAC) - the Australian Financial Authority - released drafted rules for online investing in the Country, which among other measures, proposed to cap retail investments at AUD $10000 annually and to limit the capital that companies can raise up to AUD $ 2 millions in a 12 month period.
Three full years have passed since the JOBS Act was signed. In this time, the SEC has translated into rules only some of the Titles within it, for example TItle II and Title V, but has not acted yet on Title III, which should open online investing to retail investors. However, in these weeks there are signs that the situation may change.
After having published, back in December 2014, an Opinion to national competent authorities and Advice to the EU institutions on digital investing, the European Securities and Markets Authority (ESMA) identified the need of clarifying the extent of the risks involved in investment-based crowdfunding relating to the potential for money laundering and for terrorist financing.
The Portuguese Parliament has approved at the beginning of July a legal framework for online investing. The document sets clear guidelines for the local financial market authority, Comissão do Mercado de Valores Mobiliários (CMVM), to start working on regulatory details which should be published within 60 days from the approval of the aforementioned document.
The European and American crowdfunding markets are flourishing, but it has taken longer for the Asian market to catch up. Researchers at University of California, Berkeley, Haas School of Business believe that the Chinese crowdfunding market can be worth up to 48 billion USD alone in 5 years if regulations regarding equity crowdfunding will become more lax.
At the beginning of this year the British Treasury announced that from 2016 P2P lending will be included in the ISAs scheme, thus allowing to shield from taxes up to £1000 in interests received from borrowers. A few days ago the HM Revenue & Customs (HMRC), the UK Tax Authority, expanded the ISAs scheme also to peer-to-peer investment trusts.
2015 is an hot year for digital investing in the US. In addition to the adoption of Title IV of the JOBS Act by the SEC, which in theory should be entering into effect soon, ten states approved intrastate crowdfunding regulations. To these, this week, we can add the 11th US State giving green light to online investing: Minnesota.
Peer-to-peer lending has been developing incredibly fast in the last few years across the world. In particular, hot areas for this new forms of debt finance are currently the US, the UK and China, where the markets have reached very relevant figures ($10 billion, $ 2 billion and $16 billion worth of loans respectively).
Six Canadian jurisdictions (B.C., Saskatchewan, Manitoba, Quebec, New Brunswick or Nova Scotia) have adopted a law allowing online investing from non-accredited investors. The so called “Crowdfunding Prospectus Exemption” consists mainly of two elements: a prospectus exemption permitting an issuer to distribute securities without a prospectus, and a registration exemption exempting a funding portal from having to register as a dealer.
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