What is crowdfunding?

Crowdfunding is an emerging alternative form of financing that connects those who can give, lend or invest money directly with those who need financing for a specific project. It usually refers to public online calls to contribute finance to specific projects.

Commission proposal on crowdfunding

The EU market for crowdfunding is underdeveloped as compared to other major world economies. One of the biggest hurdles faced by crowdfunding platforms seeking to offer their services across borders is the lack of common rules across the EU. This raises compliance and operational costs and prevents crowdfunding platforms from expanding.

In March 2018, as part of its Fintech action plan, the European Commission presented a proposal for a regulation on crowdfunding service providers. Once adopted at EU level, the new regulation will allow platforms to apply for an EU passport based on a single set of rules. This will make it easier for them to offer their services across the EU.

The new rules will improve access to this innovative form of finance for small investors and businesses in need of funding, particularly start-ups. Investors on crowdfunding platforms will benefit from a better protection regime and a higher level of guarantees, based on

  • clear rules on information disclosures for project owners and crowdfunding platforms
  • rules on governance and risk management
  • a coherent approach to supervision

The Commission proposal only applies to those crowdfunding services entailing a financial return for investors, such as investment and lending based crowdfunding.

European Crowdfunding Stakeholders Forum

The European Crowdfunding Stakeholders Forum assists the Commission in developing policies for crowdfunding.