The European Crowdfunding Network (ECN), has shared their thoughts on the recently released communication by the European Commission (EC) on crowdfunding.
Last week the EC released several documents and statements pertaining to a “consultation” on the innovative new form of capital formation. They garnered comments and feedback from industry participants and observers from around the world.
The ECN has been at the forefront of championing the benefits of investment crowdfunding: a new form of finance that may help boost European economies and drive a new chapter in innovation and entrepreneurship – something every economy desires.
Led by Oliver Gajda, the ECN has recognized the reality that a pan-European wide approach that would simplify and facilitate cross – border crowdfunding – would benefit the nascent industry.
The ECN states that;
The main features of the communication are a very positive and open understanding of the potential crowdfunding can have on the European economy. The balanced view on opportunities and risks, as well as the implied recommendations toward industry and stakeholders are a most welcome statement that will help to further the public understanding of crowdfunding.
The EC in their released shared their steps for approaching and managing crowdfunding as they continue to “study, explore and monitor the market” as it develops and evolves. The EC stated they would be establishing an “expert group” called the European Crowdfunding Stakeholders Forum – an entity that I would guarantee the ECN will play a leading role.
… communication is fully in line with our previously announced expectations and requests to the European Commission. We understand that the European Commission has taken a significant step in making such a bold stand at a time where uncertainty on the impact of crowdfunding still remains very high. To link the communication on Crowdfunding to the Communication on long-term financing of the European economy has clearly positioned the discussion on crowdfunding with financial services and access to finance for small and medium sized enterprises.
The European Crowdfunding Network fully supports and welcomes the communication as well as its intentions and believes that it will be an important step in the development of an adequate framework for crowdfunding that aligns with existing funding instruments. We remain concerned about the timely and adequate implementation of the proposed actions and the continuing fragmentation of what should become a single European market, but the European Crowdfunding Network will continue to be at the service of European and national policy makers and regulators in order to facilitate an open and professional discourse.
The EC confirmed there will be no further regulatory action as of yet. Something the ECN believes is positive for the emergent industry in many respects, but as they also note – allows for further national regulation to evolve which may end up being incompatible on a cross-border basis.
The ECN shared their opinion on the current regulatory environment in several of the European countries which have passed national legislation;
In this respect, the current development in the UK and Spain, where significant hurdles for market entry and customer protection are expected, we may anticipate a reduction in crowdfunding innovation in the worst case. In France, where the proposed regulation so far looks more promising despite some hurdles, we are opportunistic that a more vibrant crowdfunding sector can still develop.
In this context arrives the European Commission’s statement providing hope for a significant impact on national regulators and policy makers in order to limit further fragmentation of the single market. This indeed, might be one of the most important signs the European Commission can set right now.
The ECN remains very concerned that collaboration between national regulators, something they have been espousing since 2012, continues to be a challenge. Further fragmentation may engender an ecosystem where investment crowdfunding is stifled instead of being allowed to bloom.