Crowdfunding / Crowdlending: the European ECSPR Regulation Is Now in Force

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In an earlier article (May 2020), we reviewed crowdfunding and crowdlending in Belgium and the draft European Regulation then under study, including its treatment of cross-border crowdfunding services.

The Crowdfunding Regulation (ECSPR) in brief

The European Union has since published the Regulation of 7 October 2020 (ECSPR, European Crowdfunding Service Providers Regulation), which entered into force on 10 November 2021. The Regulation sets out, in particular, the authorisation conditions and the organisational and operational requirements applicable to the crowdfunding platforms subject to it (not all crowdfunding platforms are necessarily covered). It also lays down the duties to be observed, the internal procedures to be put in place, the rules on asset-safekeeping and payment services, investor-information questions, cross-border crowdfunding, and more.

ESMA’s technical standards under the Crowdfunding Regulation

Alongside the Regulation’s entry into force, ESMA (the European Securities and Markets Authority) published its final report on the technical standards, to guide all actors concerned, including national regulators. The standards, which take account of the comments received during the consultation launched on 26 February 2021, cover all investor-protection aspects required by the Regulation: complaint handling; conflicts of interest; the entry-knowledge test and the simulation of the ability to bear losses; the key investment information sheet; cooperation between competent authorities and with ESMA; authorisation as a crowdfunding service provider; disclosure of the default rate; client information; notification to ESMA of national marketing rules; reporting; and the business continuity plan. ESMA’s document runs to 218 pages, but the essentials are in the first 48.

What next for EU crowdfunding law?

The draft technical standards have been transmitted to the European Commission for validation and entry into force. In the meantime, ESMA continues its supervisory and support work for crowdfunding actors across the EU, notably through its Questions and Answers.

This article is a translation. Only the French version is authoritative. It is provided for information purposes and does not constitute legal advice.