On 5 October 2020, the EU adopted new rules to boost EU crowdfunding platforms and protect investors. The new rules aim to increase cross-border business funding in the EU by providing for a single set of rules on crowdfunding services. The uniform set of criteria will apply to all European Crowdfunding Service Providers up to offers of EUR 5,000,000 (calculated over a period of 12 months per project owner). Investors would be provided with a key investment information sheet drawn up by the project owner for each crowdfunding offer or at platform level. European Crowdfunding Service Providers need to request authorisation from their national competent authority in which they are established. Through a notification procedure in a Member State, such service providers would also be able to provide their services cross-border. The rules will start to apply one year after its publication in the Official Journal of the EU. Existing service providers will benefit from a transition period of up to 24 months.
Our view: To date, cross-border crowdfunding campaigns need to be assessed on a state-by-state basis to ensure compliance with all regulations. Having a uniform set of rules for cross-border campaigns can be a game changer for raising funding in the EU. Still, local laws have to be considered since the crowdfunding rules only govern regulatory aspects but not things like consumer protection laws applicable to the security offered or corporate aspects applicable to the issuer. It remains to be seen how the market will react to these changes.
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