ECON Publishes Draft Report on Proposed Regulation on European Crowdfunding Service Providers
On August 10, the European Parliament’s Economic and Monetary Affairs Committee (ECON) published its draft report on the European Commission’s March 2018 proposal for a regulation on European crowdfunding service providers (CSPs).
The draft report contains a draft European Parliament legislative resolution, the text of which sets out suggested amendments to the European Commission’s proposal. It also contains an explanatory statement in which the rapporteur, Ashley Fox, summarizes the changes he considers would improve it. In particular, Mr. Fox highlights the following:
The threshold proposed for crowdfunding offers should be raised from EUR1 million to EUR8 million. While the lower threshold tracks the threshold for the publication of a prospectus in accordance with other European requirements, certain Member States have higher thresholds. Having a low threshold for crowdfunding offers and a high threshold for a prospectus requirement would make crowdfunding a less attractive funding option.
The experience of national competent authorities (NCAs) on granting authorization and supervising the crowdfunding platforms should be recognized and their role in the European framework should be enhanced. Mr. Fox believes that there is no need for the pan-European regulator, the European Securities and Markets Authority (ESMA), to hold primary supervisory responsibility, which should remain with NCAs within a common supervisory framework.
As crowdfunding platforms vary in complexity, the proposed Regulation could differentiate between simple platforms, which facilitate the matching of investors and project owners, and more advanced platforms, which also determine the pricing and packaging of offers, by requiring different disclosure requirements for each. In doing so, there would be an opportunity to provide more proportionate regulation based on the varying activities and risks associated with each.
The regulation is an opportunity to provide regulation for initial coin offerings (ICOs) by imposing standards on ICO issuers and providing protections for consumers.
Third-country CSPs that wish to offer their services across the European Union should be able to, provided that they are authorized to do so in their own jurisdiction and measures are in place to guarantee that such CSPs adhere to the same rules as CSPs with a European passport.
The next step is for ECON to vote on the draft report before it is considered by the European Parliament in plenary.
The draft report is available here.
The European Commission’s original proposal is available here.