As of November 2021, pan-European crowdfunding rules became enforceable after approval by the European Union in 2020. Under the new rules, or European Crowdfunding Service Providers Regulation (ECSPR), a platform can raise up to €5 million from investors in all member states, thus opening the crowdfunding to investment for more than 300 million EU citizens.
Under the new rules, a securities crowdfunding provider must be approved by the competent authority in the country where it is based. Some countries have moved more quickly to process the ECSPR approval process while others have moved more slowly, leading to some discrepancies between regulators. A disparity between countries has led the EU to delay full compliance until November 2023 (originally scheduled for last November).
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The current state of licensing in Europe
Crowdcube, a leading British equity crowdfunding platform, had established an office in Spain years ago, and was the first issuer to be authorized and raise capital under the new European rules. In the following months, however, other platforms received approval from regulators in their respective states.
In ESMA’s intentions, harmonization should generate more competition and consolidation in the industry. In this regard, Invesdor, a Finnish platform, has moved quickly to merge with other platforms.
ECSPR will also encourage international (or non-European) platforms to join the EU. Wefunder, one of the largest Reg CF funding portals in the U.S., recently chose the Netherlands to obtain permission to provide securities crowdfunding services in the EU. While Seedrs, a major UK platform active in Europe, was acquired by Republic in 2021.
In Italy, the authorization process has not yet begun as the formal appointment of Consob and Banca d’Italia as the competent authority for Italy is still lacking. However, it seems assoadto that the situation will unblock in the second half of February.
A list of current platforms approved to date under the EU regulation is available. Some of them are focused on debt, while others are vertical and geared toward real estate or renewable energy. Some of them plan to offer secondary transactions through a bulletin board-type service, the only secondary market mode allowed under the regulation.
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