European Parliament approves cross-border crowdfunding rules

European peer-to-peer lending platforms and investors are set to learn the date for new harmonised crowdfunding regulations across the continent within weeks.

The European Parliament this week adopted the latest text on cross-border crowdfunding rules agreed by the European Capital Markets Union (ECMU) in July.

The rules will apply 12 months after the text is published, which is expected in the coming weeks.

The new rules state that all crowdfunding platforms in the EU must be authorised by their member state and can then passport into other jurisdictions within the bloc.

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There will be a €5m (£4.5m) limit on how much can be raised through platforms on each project over 12 months and firms will need to comply with anti-money laundering regulations and be transparent about returns and interested parties.

Similar to the UK regulations, the rules say a limit should be set on how much non-sophisticated investors can invest and they will have to complete an appropriateness test to check they understand the risks.

The rules go slightly further than the UK and will give non-sophisticated investors a “reflection period” during which they can change their minds about an investment and get their money back.

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The development was backed by the European Crowdfunding Network.

“We believe it has the potential to make pan-European crowdfunding a reality, and that doing so will be of huge benefit to European start-ups, small business and to European investors,” the ECN said.