‘What to Expect When You Are Expecting’ a European Crowdfunding Regulation: The Current ‘Bermuda Triangle’ and Future Scenarios for Marketplace Lending and Investing in Europe
37 Pages Posted: 27 Nov 2019 Last revised: 23 Dec 2019
Date Written: August 20, 2019
Marketplace lending and investing have been recently attracting increasing regulatory attention. However, regulatory responses to such phenomenon have been extremely varied, even in Europe, characterized by maximum harmonization in the field of financial regulation, continuous efforts in creating a single market and in centralizing supervision. Such fragmented framework poses the risk of different levels of investor protection in Europe, regulatory arbitrage, competition distortions, obstacles to cross-border activity and to existing EU passports. The European Commission, after an initial “wait-and-see” approach, adopted in March 2018 a proposal for a Regulation on European Crowdfunding Service Providers (ECSPs) for businesses. Such proposal, nonetheless, has undergone a number of significant revisions during the trilateral negotiations among the European Commission, the European Parliament and the Council of the European Union, underlying the ambiguous nature of crowdfunding and the complexity in reaching a common view on the same. The three European Institutions seem in fact to have divergent views of crowdfunding and different ideas on how to regulate it, this delaying the approval of the proposed Regulation. Will crowdfunding eventually escape such Bermuda Triangle receiving adequate regulation or is it destined to die in the process? The present paper, after briefly describing crowdfunding main features and regulatory trends in Member States, will critically analyze the ECSPs Regulation Proposal, with respect to all the three different versions, inferring from each text a different vision (and consequent envisioned regulation) of crowdfunding and of financial regulation in general, underlying their pros and cons and proposing adjustments to reach a functional, tiered and proportional regulation. Finally, after mentioning certain recent revisions in national crowdfunding laws (e.g. in Italy, Belgium, UK and Germany), the paper will conclude trying to forecast the future direction of the ongoing trilateral negotiations and the possible impact of the European Regulation on national crowdfunding laws and the sector.
Keywords: European Crowdfunding Services Providers, Regulation, Banking regulation, peer-to-peer lending, crowdfunding, FinTech, MiFID II, Prospectus, regulatory arbitrage
JEL Classification: D18, E51, G21, G23, G24, G28, G29, G38, K12, K20, K22, K24, L14, L22, O16, O17
Suggested Citation: Suggested Citation