The New Financial Crowdfunding Regulation and Its Implications for Investment Services under MiFID II

Abstract

The new European Crowdfunding Service Providers Regulation aims at harmonizing the financial crowdfunding regulatory framework in the EU. In many respects inspired by MiFID II, it draws a distinction between crowdfunding services and investment services, but at the same time raises new questions. It seems the Regulation might have a significant impact on how the content of investment-based crowdfunding as well as individual investment services is to be interpreted. The paper aims firstly to analyse the scope of the new Regulation, with special attention to the exemptions set by the Regulation itself as well as those originating from the EU financial services regulatory architecture. Secondly, it evaluates the relationship between investment-based crowdfunding and investment services under MiFID II, namely the reception and transmission of orders and placing on no-commitment basis, in order to distinguish the respective types of activities. Attention is given particularly to the simultaneous provision of reception and transmission of orders and placing on the no-commitment basis as a conceptual characteristic of financial crowdfunding. Finally, the consequences the Regulation might have for the interpretation of scope and content of certain present investment services under MiFID II are analysed. Namely, placing on the no-commitment basis, investment advice and portfolio management are put under scrutiny.

Keywords: Investment-based crowdfunding, investment services, financial instruments, Crowdfunding regulation, MiFID II