The European Commission has published an Action Plan (PDF 538 KB) on how to harness the opportunities presented by technology-enabled innovation in financial services (fintech).
The ambition is that Europe should become a global hub for fintech, with EU businesses and investors able to make most of the advantages offered by the Single Market in this fast-moving sector. The Commission sees this as also relating to Capital Markets Union (CMU), a properly functioning single market for consumer financial services, and the creation of a Digital Single Market.
Within the Action Plan the Commission is proposing a Regulation on crowdfunding.
The Commission's Action Plan proposes 23 steps to enable innovative business models to scale up, support the uptake of new technologies, and to enhance cybersecurity and the integrity of the financial system. The steps include:
The prospect of a wave of fintech related legislation looks large.
The Commission observes that existing national regimes for crowdfunding are often conflicting and hamper the development of a Single Market for crowdfunding services.
The Commission therefore proposes a Regulation on investment-based and lending-based crowdfunding service providers (ECSP). This will offer a European cross-border passporting regime for those market players who choose to apply to operate as an ECSP, under the supervision of the European Securities Markets Authority (ESMA).
The Regulation sets out requirements on ECSPs:
In addition, investor protection is reinforced through requirements on:
Responsibility for authorisation, supervision and administrative sanctions will be given to ESMA, which will also have to prepare detailed rules and guidelines to flesh out the Regulation.
It will be interesting to see how many crowdfunding providers will want to subject themselves to the requirements proposed in the Regulation as a means of gaining greater scale through cross-border operations.