Communication on Crowdfunding in the EU

Key aspects of the Communication - CF: ‘open call to the wider public to raise funds for a specific project’, often published through the internet, open for a specific time period - the Communication refers to two types of CF (crowd-sponsoring and crowd-lending/crowd- investing), but models might evolve in the future. - benefits (for economy, contributors and entrepreneurs) - challenges (next slide) - actions

Key challenges for crowdfunding in the EU - lack of transparency on the applicable rules - market access and investor protection - tax treatment of contributions - lack of awareness - possibilities for matched (public and private) financing

Lack of transparency on the applicable rules – all types of CF - anti-money laundering - misleading advertising - consumer protection - intellectual property protection, where relevant - fraud by project managers and/or platforms - Payment Services Directive

Lack of transparency on the applicable rules - financial return - depends on the specific business model - relevant EU regulatory framework includes Prospectus Directive, Payment Services Directive MiFID, CRD/R, AIFMD, Consumer Credit Directive, Directive on Distance Marketing of Financial Services, EVC and ESEFs Regulations - several Member States have taken or are taking regulatory actions with regard to CF (the UK, France, Italy, Spain and Belgium)

Issues for financial return CF identified by stakeholders: - no transparency (information on investment and credit risks) - no advice on investment diversification - client money protection - exercise of shareholder voting rights - threshold for prospectus requirements - investment limits

Actions proposed in the Communication 1. The European Crowdfunding Stakeholder Forum (raising awareness, provide advice and expertise to the Commission, exchange of good practices, identification of issues) 2. Studies - to examine existing national self-regulatory bodies and their rules - to explore the potential of establishing a European quality label - to exchange good practices on R&D tax incentives schemes

Actions proposed in the Communication 3. The Commission will monitor developments around CF in the context of the functioning of the internal market (workshops, recommendations through the Single Market Report or the Network of the SME Envoys, if necessary)and consider if further EU action is necessary in order for CF to flourish while taking into account the interest of contributors.

Thank you