Resolving the Crowdfunding Conundrum: The Experience of the United States and Spain

78 Pages Posted: 27 Nov 2019

See all articles by Rafael A Porrata-Doria

Rafael A Porrata-Doria

Temple University - James E. Beasley School of Law

Multiple version iconThere are 2 versions of this paper

Date Written: November 14, 2019


The phenomenon known as crowdfunding has become an attractive alternative for businesses looking for investors without having to go through more well-established routes or without necessarily having to lure and impress professional investors. However, this new form of raising capital creates a series of issues and problems unique to crowdfunding, which has led to a struggle amongst governments to effectively regulate this new entrepreneurial opportunity. The crowdfunding conundrum government regulators are facing causes them to have to reconcile two contradictory missions: facilitating the acquisition of capital by businesses and protecting investors (and the market) from fraud and manipulation. This article analyzes this conundrum from a United States and Spanish perspective. I first describe the crowdfunding conundrum in general terms by explaining how crowdfunding, (both consumer and accredited investor) works in practice and explore the major problems and issues that startup companies, investors, the market, and the state face in crowdfunding which need to be resolved in a regulatory system. I will then describe and evaluate the current American and Spanish and proposed European regulatory solutions to the crowdfunding conundrum. I then conclude by evaluating be whether and how well the United States’ and Spain’s regulations as well as the EU proposed regulations, have attempted to resolve the conundrum by balancing the risks and problems facing crowdfunding transactions.

Keywords: securities law, crowdfunding, comparative law, united states, spain

JEL Classification: K22, K33

Suggested Citation

Porrata-Doria, Rafael A, Resolving the Crowdfunding Conundrum: The Experience of the United States and Spain (November 14, 2019). American University Business Law Review, Forthcoming, Temple University Legal Studies Research Paper No. 2019-37, Available at SSRN:

Rafael A Porrata-Doria (Contact Author)

Temple University - James E. Beasley School of Law ( email )

1719 N. Broad Street
Philadelphia, PA 19122
United States

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