THE EUROPEAN Commission has proposed a draft law to enable crowdfunding platforms to access customers across the EU, as the bloc looks to become a global hub for fintech.
The executive arm of the EU revealed an action plan on Thursday that looks to tap into rapid advances in new technologies such as blockchain, artificial intelligence and cloud services, while also making crowdfunding markets safer and easier to access for new companies.
A key component in doing this is creating a single market-wide crowdfunding licence that allows platforms to operate across the EU under a single set of regulations. This will be a blow to the UK, which is a global fintech hub now but is leaving the EU next year and will need to negotiate to maintain access to its European neighbours.
“To compete globally, Europe’s innovative companies need access to capital, space to experiment and scale to grow,” said Valdis Dombrovskis, vice president for financial stability, financial services and a capital markets union at the European Commission. “This is the premise for our fintech action plan.
“An EU crowdfunding licence would help crowdfunding platforms scale up in Europe. It will help them match investors and companies from all over the EU, giving more opportunities for firms and entrepreneurs to pitch their ideas to a wider base of funders.”
At the moment, there is no single set of rules for EU crowdfunding platforms, with companies instead having to adhere to a variety of nationally-set regulations.
The draft law has 23 steps, including creating a forum where European and national authorities will engage with technology companies in a neutral, non-commercial environment.
Other steps involve continuing the work of the existing EU Blockchain Observatory and Forum, which is due to report on the challenges and opportunities of crypto assets later this year.
The Blockchain Observatory and Forum is also due to release a comprehensive strategy on distributed ledger technology and blockchain that will address all sectors of the economy.
The draft law also looks to improving information sharing on cybersecurity, set up blueprints for best regulatory practices and consult on how best to promote the digitisation of information published by Europe’s listed companies, allowing easier access to information necessary for investment decisions.
“New technologies are transforming the financial industry by revolutionising the way people access financial services,” said Jyrki Katainen, the European Commission’s vice president for jobs, growth, investment and competitiveness.
“Alternative sources of funding, such as crowdfunding or peer-to-peer lending, directly link savings with investments. They make the market more accessible for innovative entrepreneurs, start-ups and small companies.”