Last November, the European Union authorized pan-European crowdfunding, European Crowdfunding Service Provider Regulation (ECSPR), for issuers to raise up to €5 million across all member states. Investment crowdfunding platforms that aim to sell securities in the European Union must be regulated by the relevant authority in the country where they are based. This means member state securities regulators have some leeway as to how platforms and issuers are managed within each country – and could lead to some regulatory arbitrage. This, along with the fact that the European Securities and Markets Authority (ESMA) continues to work through some of the details of the ecosystem, may lead to an extension of the “transitional period” according to industry insiders.
Recently, EUROCROWD – the association that represents the industry in Europe, posted a statement that they expect an extension on ECSPR implementation for 12 additional months to November 2023. EUROCROWD is currently completing a survey of its members regarding ECSPR which is scheduled to close tomorrow (April 4).
EUROCROWD explains that an extension of the transitional period will “ease the pressure on both national conduct authorities and platforms in some cases, it might also add cost in others.” Platforms regulated under national law would not be required to adhere to ECSPR until 2023.
EUROCROWD states that it may also “distort competition within the European market.”
Following the survey, EUROCROWD expects to share its information with the European Commission as it pursues its ultimate goal of a streamlined, and efficient pan-European securities crowdfunding market that is not undermined by excessive regulation.
