28 September 2020
Today, the Committee on Economic and Monetary Affairs in the European Parliament gave its “yes” vote to the new crowdfunding EU wide rules agreed under the lead of the Slovak ECR Rapporteur Eugen Jurzyca before its final endorsement in the plenary session expected next week. The regulation is a part of the Capital Market Union legislation.
Today, the Committee on Economic and Monetary Affairs in the European Parliament gave its “yes” vote to the new crowdfunding EU wide rules agreed under the lead of the Slovak ECR Rapporteur Eugen Jurzyca before its final endorsement in the plenary session expected next week. The text was adopted with 43 votes in favour, 10 votes against and 4 abstentions. The regulation is a part of the Capital Market Union legislation.
Speaking after the vote, ECR Rapporteur Eugen Jurzyca said: “SMEs across the market need fast and safe access to capital more than ever before. Crowdfunding might be an option for many of them. In my view, we gave the sector a very decent yet not an ideal base, which will open the market for cross border crowdfunding financing.”
For more than a decade, crowdfunding is a well- established form of alternative finance for start-ups and SMEs looking for small investments. The system is rather simple: A small company introduces its project via an online crowdfunding platform. This platform then helps the company to receive financial support in the form of a loan or equity. This helps to protect investors looking to gain a financial benefit from their investment. Different domestic regimes on crowdfunding often means that investors are discouraged from cross-border investing. This has kept crowdfunding markets rather national.
The new legislation brings an EU wide approach and is expected to help individual investors to have a greater share in economic growth and improve access to finance for many micro enterprises and SMEs. Both lending-based and investment-based crowdfunding will be covered up to 5 Million Euros per project owner for 12 months, including individual portfolio loans. Cryptocurrencies and peer-to-peer lending for non-business purposes are excluded.
The European Parliament and the Council agreed that authorisation will be granted and supervision will be provided by the national authorities. It is expected that the European Securities and Markets Authority (ESMA) will be involved in order to mediate possible disputes between the national authorities.
The Parliament hopes for a very detailed analysis delivered by the Commission after two years following the application of this Regulation, to see whether the internal market for crowdfunding blossoms as expected.
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