BETA


2018/0048(COD) European crowdfunding service providers (ECSP) for business

Progress: Awaiting Council 1st reading position / budgetary conciliation convocation

RoleCommitteeRapporteurShadows
Lead ECON SANDER Anne (icon: PPE PPE), KAILI Eva (icon: S&D S&D), NAGTEGAAL Caroline (icon: ALDE ALDE), MATIAS Marisa (icon: GUE/NGL GUE/NGL), SCOTT CATO Molly (icon: Verts/ALE Verts/ALE), VALLI Marco (icon: EFDD EFDD)
Committee Opinion ITRE
Committee Opinion IMCO
Committee Opinion JURI
Lead committee dossier:
Legal Basis:
TFEU 113

Events

2019/03/27
   EP - Decision by Parliament, 1st reading/single reading
Details

The European Parliament adopted by 474 votes to 121 with 10 abstentions, a legislative resolution on the proposal for a regulation of the European Parliament and of the Council on European Crowdfunding Service Providers (ECSP) for Business.

Parliament's position adopted at first reading under the ordinary legislative procedure amends the Commission's proposal as follows:

The regulation introduces an optional EU scheme allowing crowdfunding platforms to easily deliver their services across the EU single market. It applies to legal persons who choose to seek authorisation under the Regulation and to crowdfunding service providers authorised under the Regulation, in relation to the provision of crowdfunding services. Those legal persons shall have an effective and stable establishment in a Member State in order to be eligible to apply for authorisation.

The regulation does not apply to crowdfunding offers with a consideration of more than EUR 8 000 000 per crowdfunding offer, which shall be calculated over a period of 12 months with in regard to a particular crowdfunding project.

Application for authorisation

This shall include, inter alia :

- a programme of operations setting out the types of crowdfunding services that the prospective crowd funding service provider wishes to provide and the platform that it intends to operate, including where and how offers are to be marketed;

- a description of the prospective crowdfunding service provider’s business continuity arrangements, to ensure that any loan repayments and investments will continue to be administered to the investors in the event of insolvency of the prospective crowdfunding service provider;

- the description of the internal rules of the prospective crowdfunding service provider on conflicts of interest pertaining to employees’ exposure to project;

- proof that the crowdfunding service provider is adequately covered or holds sufficient capital against the financial consequences of its professional liability in the event of a failure to comply with its professional obligations set out in this Regulation.

Organisational and operational requirements

The amendments introduced concern in particular:

- the obligation for crowdfunding service providers to undertake at least a minimum level of due diligence in respect of project owners that propose their project to be funded by the crowdfunding platform of a crowdfunding service provider;

- the obligation for crowdfunding service providers to have in place and publish descriptions of effective and transparent procedures for the prompt, fair and consistent handling of complaints received from clients;

- the obligation to clearly inform clients when crowdfunding service providers hold a financial interest in a proposed crowdfunding offer on their platform;

- encouraging the implementation of incentive mechanisms to ensure that crowdfunding platforms align their incentives with those of investors, incentive mechanisms shall be encouraged;

- the obligation for crowdfunding service providers to provide their services under the supervision of the national competent authority of the Member State where the crowdfunding service provider has been authorised;

- the obligation for each Member State to designate the competent national authority responsible for carrying out the tasks provided for in this Regulation as regards the authorisation and supervision of crowdfunding service providers and to inform the European Securities and Markets Authority (ESMA);

- the introduction of a procedure for the settlement of disputes between competent authorities;

- the verification by crowdfunding service providers that the proposed services offered are appropriate for investors (entry knowledge test and simulation of the ability to bear loss);

- the obligation to provide fair, clear and not misleading information to clients and to ask the potential investor for information about his or her experience, investment objectives, financial situation and understanding of the risks associated with granting loans or acquiring securities through a crowdfunding platform;

- the definition of the content of a key investment information sheet to be supplied to potential investors for every crowdfunding offer.

In order to ensure the consistent application of the authorisations of, and requirements for, crowdfunding services providers operating across the Union, regulatory technical standards shall be developed by European Securities and Markets Authority (ESMA) for submission to the Commission.

Penalties

Member States shall confer on the competent authorities the power to apply minimum administrative penalties and other administrative measures in the event of infringements of the Regulation, including a temporary or, for repeated serious infringements, permanent ban preventing any member of the management body of the legal person responsible for the infringement, or any other natural person held responsible for the infringement, from exercising management functions in such undertakings.

Alternative investment instruments

The Commission shall assess the need to propose a separate legislative framework at EU level for alternative investment instruments, such as initial coin offerings (ICOs), which are likely to finance SMEs, start-ups and innovative growth companies, and to accelerate technology transfer, in addition to being an essential part of the capital markets union.

Documents
2018/11/09
   EP - Committee report tabled for plenary, 1st reading/single reading
Details

The Committee on Economic and Monetary Affairs adopted the report by Ashley FOX (ECR, UK) on the proposal for a regulation of the European Parliament and of the Council on European Crowdfunding Service Providers (ECSP) for Business.

The committee recommended that the European Parliament's position adopted at first reading under the ordinary legislative procedure should amend the Commission's proposal.

The proposed Regulation seeks to establish uniform requirements for the operation, organisation, authorisation and supervision of crowdfunding service providers as well as transparency and marketing communications in relation to the provision of crowdfunding services in the Union.

The Regulation shall apply to legal persons who choose to seek authorisation under the Regulation and to crowdfunding service providers authorised under the Regulation, in relation to the provision of crowdfunding services. Those legal persons shall have an effective and stable establishment in a Member State in order to be eligible to apply for authorisation.

The application for authorisation shall include, inter alia :

a programme of operations setting out the types of crowdfunding services that the prospective crowd funding service provider wishes to provide and the platform that it intends to operate, including where and how offers are to be marketed; a description of the prospective crowdfunding service provider’s business continuity arrangements, to ensure that any loan repayments and investments will continue to be administered to the investors in the event of insolvency of the prospective crowdfunding service provider;

· the description of the internal rules of the prospective crowdfunding service provider on conflicts of interest pertaining to employees’ exposure to project;

· proof that the crowdfunding service provider is adequately covered or holds sufficient capital against the financial consequences of its professional liability in the event of a failure to comply with its professional obligations set out in this Regulation.

The amendments introduced concern in particular:

the obligation for crowdfunding service providers to undertake at least a minimum level of due diligence in respect of project owners that propose their project to be funded by the crowdfunding platform of a crowdfunding service provider; the obligation for crowdfunding service providers to have in place and publish descriptions of effective and transparent procedures for the prompt, fair and consistent handling of complaints received from clients; encouraging the implementation of incentive mechanisms to ensure that crowdfunding platforms align their incentives with those of investors, incentive mechanisms shall be encouraged; the obligation for crowdfunding service providers to provide their services under the supervision of the national competent authority of the Member State where the crowdfunding service provider has been authorised; the designation of each Member State of the national competent authority responsible for carrying out the duties under this Regulation for the authorisation and supervision of crowdfunding services providers and shall inform ESMA; the introduction of a procedure for the settlement of disputes between competent authorities; the verification by crowdfunding service providers that the proposed services offered are appropriate for investors (entry knowledge test and simulation of the ability to bear loss); the definition of the content of a key investment information sheet to be supplied to potential investors for every crowdfunding offer; the obligation for Member States to confer on the competent authorities the power to apply minimum administrative penalties and other administrative measures in the event of infringements of the Regulation, including a temporary or, for repeated serious infringements, permanent ban preventing any member of the management body of the legal person responsible for the infringement, or any other natural person held responsible for the infringement, from exercising management functions in such undertakings.

In order to ensure the consistent application of the authorisations of, and requirements for, crowdfunding services providers operating across the Union, regulatory technical standards shall be developed by European Securities and Markets Authority (ESMA) for submission to the Commission.

The Commission shall assess the need to propose a separate legislative framework at EU level for alternative investment instruments, such as initial coin offerings ( ICOs) , which are likely to finance SMEs, start-ups and innovative growth companies, and to accelerate technology transfer, in addition to being an essential part of the capital markets union.

Documents
2018/11/05
   EP - Vote in committee, 1st reading/single reading
2018/11/05
   EP - Committee decision to open interinstitutional negotiations with report adopted in committee
2018/09/13
   EP - Amendments tabled in committee
Documents
2018/08/10
   EP - Committee draft report
Documents
2018/05/14
   ES_CONGRESS - Contribution
Documents
2018/05/14
   PT_PARLIAMENT - Contribution
Documents
2018/04/16
   EP - Committee referral announced in Parliament, 1st reading/single reading
2018/03/08
   EC - Document attached to the procedure
2018/03/08
   EC - Document attached to the procedure
2018/03/08
   EC - Legislative proposal published
Details

PURPOSE: to establish common rules at Union level on crowdfunding.

PROPOSED ACT: Regulation of the European Parliament and of the Council.

ROLE OF THE EUROPEAN PARLIAMENT: the European Parliament decides in accordance with the ordinary legislative procedure on an equal footing with the Council.

BACKGROUND: crowdfunding has emerged as an established practice of funding a project or a venture, typically by a large number of people or organisations, through online platforms on which citizens, organisations and businesses, including business start-ups, raise relatively small amounts of money. Crowdfunding can thus provide an alternative to unsecured bank lending , which are currently the main sources of external finance for SMEs.

The provision of crowdfunding services generally relies on three types of actors: the project owner that proposes the project to be funded, investors who fund the proposed project, generally by limited investments, and an intermediating organisation in the form of a service provider that brings together project owners and investors through an online platform.

Several Member States have already introduced domestic bespoke regimes on crowdfunding.

Those regimes are tailored to the characteristics and needs of local markets and investors. As a result, the national rules diverge as regards the conditions of operation of crowdfunding platforms, the scope of permitted activities and the licencing requirements.

The differences between the existing national rules are such as to obstruct the cross border provision of crowdfunding services . It is therefore necessary to address the existing obstacles to the proper functioning of the internal market in crowdfunding services.

This initiative is part of the Commission's priority of establishing a Capital Market Union (CMU), which aims to broaden access to finance for innovative companies, start-ups and other unlisted firms.

IMPACT ASSESSMENT: the impact assessment concluded that EU crowdfunding markets for business finance are largely underdeveloped compared to other major economies but - and most importantly - unable to properly operate cross-border.

Amongst the options studied, the preferred option consists of introducing an EU-label for crowdfunding service providers, which would be authorised and supervised at EU level under an EU regime.

CONTENT: the Commission’s proposal introduces an optional EU scheme that allows crowdfunding platforms to easily deliver their services across the EU single market. It establishes a one-stop-shop access to the EU market and therefore helps crowdfunding platforms in overcoming the barriers they face operating cross-border.

The proposal does not intend to interfere with national bespoke regimes or existing licenses, including those under the Markets in Financial Instruments Directive ( MiFID II ), the Payment Services Directive (PSD) and the Alternative Investment Fund Managers Directive (AIFMD), but rather to provide crowdfunding service providers with the possibility to apply for an EU label that empowers them to scale up their operations throughout the Union under certain conditions.

Scope : the proposal applies to crowdfunding services involving financial remuneration for investors. Donation and reward-based crowdfunding are excluded from the scope of this initiative, as they cannot be considered financial services. The proposal does not include in its scope consumers lending for consumption purposes.

Effective and prudent management : crowdfunding service providers must at all times comply with the organisational requirements, while natural persons having the power to manage a crowdfunding service provider should have appropriate skills and professional experience . A crowdfunding service provider must maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps designed to prevent conflicts of interest from adversely affecting the interests of its clients.

Authorisation and monitoring : the proposal provides uniform, proportionate and directly applicable requirements for authorisation and a single point of supervision. Crowdfunding service providers will provide their services under the supervision of the European Securities and Markets Authority (ESMA).

Investor protection and transparency : the proposal also aims to provide investors with the necessary information on crowdfunding, including the underlying risks. Accordingly, all information, including marketing communications, from crowdfunding service providers to clients must be complete, clear and correct. The proposal sets out an initial assessment of the appropriateness of a potential client and provides that platforms shall offer investors the possibility to simulate their ability to bear losses.

The proposed regulation also provides for adequate safeguards to minimize the risk of money laundering and terrorist financing.

BUDGETARY IMPLICATIONS: the preferred option holds implications in terms of costs and administrative burden for ESMA.

Assuming that ESMA will be in charge of authorising and supervising 25 providers in the first full year of implementation (2020), there will be a cost impact (net of fees charged on the industry) of approximately EUR 1 637 000 in that year. This estimate also includes half of EUR 500 000 in one-off costs to be split over the first two years, used to setup the necessary IT systems.

DELEGATED ACTS: the proposal contains provisions empowering the Commission to adopt delegated acts in accordance with Article 290 of the Treaty on the Functioning of the European Union.

Documents

Votes

A8-0364/2018 - Ashley Fox - Vote unique 27/03/2019 17:05:40.000

2019/03/27 Outcome: +: 474, -: 121, 0: 10
IT DE PL FR ES RO BE BG HU AT GB PT SK CZ FI NL DK HR LT SI SE LV MT EE LU IE CY EL
Total
60
83
40
58
49
19
21
15
17
16
59
19
11
17
9
25
11
8
8
8
15
7
6
4
4
8
1
7
icon: PPE PPE
168

United Kingdom PPE

2

Sweden PPE

2

Estonia PPE

For (1)

1

Luxembourg PPE

1

Greece PPE

For (1)

1
icon: S&D S&D
157

Czechia S&D

2

Finland S&D

1

Netherlands S&D

3

Croatia S&D

For (1)

1

Slovenia S&D

For (1)

1

Latvia S&D

1

Malta S&D

Abstain (1)

3

Estonia S&D

For (1)

1

Luxembourg S&D

For (1)

1

Ireland S&D

For (1)

1

Greece S&D

1
icon: ALDE ALDE
59

Germany ALDE

3

Romania ALDE

2

Austria ALDE

For (1)

1

United Kingdom ALDE

1

Portugal ALDE

1

Croatia ALDE

For (1)

1

Lithuania ALDE

1

Slovenia ALDE

For (1)

1

Sweden ALDE

2

Latvia ALDE

1

Estonia ALDE

2

Luxembourg ALDE

For (1)

1

Ireland ALDE

For (1)

1
icon: ECR ECR
57

Romania ECR

For (1)

1

Bulgaria ECR

1

Slovakia ECR

2

Czechia ECR

2

Finland ECR

1

Netherlands ECR

2

Croatia ECR

For (1)

1

Sweden ECR

2
icon: ENF ENF
31

Germany ENF

For (1)

1

Belgium ENF

Abstain (1)

1

United Kingdom ENF

2

Netherlands ENF

4
icon: EFDD EFDD
36

Germany EFDD

Against (1)

1

Poland EFDD

1

Czechia EFDD

Against (1)

1

Lithuania EFDD

For (1)

1
icon: NI NI
13

Italy NI

For (1)

1

Poland NI

Against (1)

2

France NI

For (1)

Against (1)

2

Hungary NI

For (1)

1

United Kingdom NI

For (1)

Against (2)

3
icon: GUE/NGL GUE/NGL
40

Italy GUE/NGL

2

United Kingdom GUE/NGL

Against (1)

1

Netherlands GUE/NGL

3

Denmark GUE/NGL

Against (1)

1

Sweden GUE/NGL

Against (1)

1

Ireland GUE/NGL

3

Cyprus GUE/NGL

Against (1)

1

Greece GUE/NGL

Against (1)

1
icon: Verts/ALE Verts/ALE
44

France Verts/ALE

3

Belgium Verts/ALE

2

Hungary Verts/ALE

2

Austria Verts/ALE

Against (2)

2

United Kingdom Verts/ALE

6

Netherlands Verts/ALE

2

Denmark Verts/ALE

Against (1)

1

Croatia Verts/ALE

Against (1)

1

Lithuania Verts/ALE

Against (1)

1

Slovenia Verts/ALE

Against (1)

1

Sweden Verts/ALE

3

Latvia Verts/ALE

Against (1)

1

Luxembourg Verts/ALE

Against (1)

1

A8-0364/2018 - Ashley Fox - Vote unique

2019/03/27 Outcome: +: 474, -: 121, 0: 10
IT DE PL FR ES RO BE BG HU AT GB PT SK CZ FI NL DK HR LT SI SE LV MT EE LU IE CY EL
Total
60
83
40
58
48
19
21
15
17
16
59
19
11
17
9
25
11
8
8
8
15
7
6
4
4
8
1
7
icon: PPE PPE
168

United Kingdom PPE

2

Sweden PPE

2

Estonia PPE

For (1)

1

Luxembourg PPE

1

Greece PPE

For (1)

1
icon: S&D S&D
157

Czechia S&D

2

Finland S&D

1

Netherlands S&D

3

Croatia S&D

For (1)

1

Slovenia S&D

For (1)

1

Latvia S&D

1

Malta S&D

Abstain (1)

3

Estonia S&D

For (1)

1

Luxembourg S&D

For (1)

1

Ireland S&D

For (1)

1

Greece S&D

1
icon: ALDE ALDE
58

Germany ALDE

3

Romania ALDE

2

Austria ALDE

For (1)

1

United Kingdom ALDE

1

Portugal ALDE

1

Croatia ALDE

For (1)

1

Lithuania ALDE

1

Slovenia ALDE

For (1)

1

Sweden ALDE

2

Latvia ALDE

1

Estonia ALDE

2

Luxembourg ALDE

For (1)

1

Ireland ALDE

For (1)

1
icon: ECR ECR
57

Romania ECR

For (1)

1

Bulgaria ECR

1

Slovakia ECR

2

Czechia ECR

2

Finland ECR

1

Netherlands ECR

2

Croatia ECR

For (1)

1

Sweden ECR

2
icon: ENF ENF
31

Germany ENF

For (1)

1

Belgium ENF

Abstain (1)

1

United Kingdom ENF

2

Netherlands ENF

4
icon: EFDD EFDD
36

Germany EFDD

Against (1)

1

Poland EFDD

1

Czechia EFDD

Against (1)

1

Lithuania EFDD

For (1)

1
icon: NI NI
13

Italy NI

For (1)

1

Poland NI

Against (1)

2

France NI

For (1)

Against (1)

2

Hungary NI

For (1)

1

United Kingdom NI

For (1)

Against (2)

3
icon: GUE/NGL GUE/NGL
40

Italy GUE/NGL

2

United Kingdom GUE/NGL

Against (1)

1

Netherlands GUE/NGL

3

Denmark GUE/NGL

Against (1)

1

Sweden GUE/NGL

Against (1)

1

Ireland GUE/NGL

3

Cyprus GUE/NGL

Against (1)

1

Greece GUE/NGL

Against (1)

1
icon: Verts/ALE Verts/ALE
44

France Verts/ALE

3

Belgium Verts/ALE

2

Hungary Verts/ALE

2

Austria Verts/ALE

Against (2)

2

United Kingdom Verts/ALE

6

Netherlands Verts/ALE

2

Denmark Verts/ALE

Against (1)

1

Croatia Verts/ALE

Against (1)

1

Lithuania Verts/ALE

Against (1)

1

Slovenia Verts/ALE

Against (1)

1

Sweden Verts/ALE

3

Latvia Verts/ALE

Against (1)

1

Luxembourg Verts/ALE

Against (1)

1
AmendmentsDossier
198 2018/0048(COD)
2018/09/13 ECON 198 amendments...
source: 627.793

History

(these mark the time of scraping, not the official date of the change)

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          text
          • PURPOSE: to establish common rules at Union level on crowdfunding.

            PROPOSED ACT: Regulation of the European Parliament and of the Council.

            ROLE OF THE EUROPEAN PARLIAMENT: the European Parliament decides in accordance with the ordinary legislative procedure on an equal footing with the Council.

            BACKGROUND: crowdfunding has emerged as an established practice of funding a project or a venture, typically by a large number of people or organisations, through online platforms on which citizens, organisations and businesses, including business start-ups, raise relatively small amounts of money. Crowdfunding can thus provide an alternative to unsecured bank lending, which are currently the main sources of external finance for SMEs.

            The provision of crowdfunding services generally relies on three types of actors: the project owner that proposes the project to be funded, investors who fund the proposed project, generally by limited investments, and an intermediating organisation in the form of a service provider that brings together project owners and investors through an online platform.

            Several Member States have already introduced domestic bespoke regimes on crowdfunding.

            Those regimes are tailored to the characteristics and needs of local markets and investors. As a result, the national rules diverge as regards the conditions of operation of crowdfunding platforms, the scope of permitted activities and the licencing requirements.

            The differences between the existing national rules are such as to obstruct the cross border provision of crowdfunding services. It is therefore necessary to address the existing obstacles to the proper functioning of the internal market in crowdfunding services.

            This initiative is part of the Commission's priority of establishing a Capital Market Union (CMU), which aims to broaden access to finance for innovative companies, start-ups and other unlisted firms.

            IMPACT ASSESSMENT: the impact assessment concluded that EU crowdfunding markets for business finance are largely underdeveloped compared to other major economies but - and most importantly - unable to properly operate cross-border.

            Amongst the options studied, the preferred option consists of introducing an EU-label for crowdfunding service providers, which would be authorised and supervised at EU level under an EU regime.

            CONTENT: the Commission’s proposal introduces an optional EU scheme that allows crowdfunding platforms to easily deliver their services across the EU single market. It establishes a one-stop-shop access to the EU market and therefore helps crowdfunding platforms in overcoming the barriers they face operating cross-border.

            The proposal does not intend to interfere with national bespoke regimes or existing licenses, including those under the Markets in Financial Instruments Directive (MiFID II), the Payment Services Directive (PSD) and the Alternative Investment Fund Managers Directive (AIFMD), but rather to provide crowdfunding service providers with the possibility to apply for an EU label that empowers them to scale up their operations throughout the Union under certain conditions.

            Scope: the proposal applies to crowdfunding services involving financial remuneration for investors. Donation and reward-based crowdfunding are excluded from the scope of this initiative, as they cannot be considered financial services. The proposal does not include in its scope consumers lending for consumption purposes.

            Effective and prudent management: crowdfunding service providers must at all times comply with the organisational requirements, while natural persons having the power to manage a crowdfunding service provider should have appropriate skills and professional experience. A crowdfunding service provider must maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps designed to prevent conflicts of interest from adversely affecting the interests of its clients.

            Authorisation and monitoring: the proposal provides uniform, proportionate and directly applicable requirements for authorisation and a single point of supervision. Crowdfunding service providers will provide their services under the supervision of the European Securities and Markets Authority (ESMA).

            Investor protection and transparency: the proposal also aims to provide investors with the necessary information on crowdfunding, including the underlying risks. Accordingly, all information, including marketing communications, from crowdfunding service providers to clients must be complete, clear and correct. The proposal sets out an initial assessment of the appropriateness of a potential client and provides that platforms shall offer investors the possibility to simulate their ability to bear losses.

            The proposed regulation also provides for adequate safeguards to minimize the risk of money laundering and terrorist financing.

            BUDGETARY IMPLICATIONS: the preferred option holds implications in terms of costs and administrative burden for ESMA.

            Assuming that ESMA will be in charge of authorising and supervising 25 providers in the first full year of implementation (2020), there will be a cost impact (net of fees charged on the industry) of approximately EUR 1 637 000 in that year. This estimate also includes half of EUR 500 000 in one-off costs to be split over the first two years, used to setup the necessary IT systems.

            DELEGATED ACTS: the proposal contains provisions empowering the Commission to adopt delegated acts in accordance with Article 290 of the Treaty on the Functioning of the European Union.

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        • PURPOSE: to establish common rules at Union level on crowdfunding.

          PROPOSED ACT: Regulation of the European Parliament and of the Council.

          ROLE OF THE EUROPEAN PARLIAMENT: the European Parliament decides in accordance with the ordinary legislative procedure on an equal footing with the Council.

          BACKGROUND: crowdfunding has emerged as an established practice of funding a project or a venture, typically by a large number of people or organisations, through online platforms on which citizens, organisations and businesses, including business start-ups, raise relatively small amounts of money. Crowdfunding can thus provide an alternative to unsecured bank lending, which are currently the main sources of external finance for SMEs.

          The provision of crowdfunding services generally relies on three types of actors: the project owner that proposes the project to be funded, investors who fund the proposed project, generally by limited investments, and an intermediating organisation in the form of a service provider that brings together project owners and investors through an online platform.

          Several Member States have already introduced domestic bespoke regimes on crowdfunding.

          Those regimes are tailored to the characteristics and needs of local markets and investors. As a result, the national rules diverge as regards the conditions of operation of crowdfunding platforms, the scope of permitted activities and the licencing requirements.

          The differences between the existing national rules are such as to obstruct the cross border provision of crowdfunding services. It is therefore necessary to address the existing obstacles to the proper functioning of the internal market in crowdfunding services.

          This initiative is part of the Commission's priority of establishing a Capital Market Union (CMU), which aims to broaden access to finance for innovative companies, start-ups and other unlisted firms.

          IMPACT ASSESSMENT: the impact assessment concluded that EU crowdfunding markets for business finance are largely underdeveloped compared to other major economies but - and most importantly - unable to properly operate cross-border.

          Amongst the options studied, the preferred option consists of introducing an EU-label for crowdfunding service providers, which would be authorised and supervised at EU level under an EU regime.

          CONTENT: the Commission’s proposal introduces an optional EU scheme that allows crowdfunding platforms to easily deliver their services across the EU single market. It establishes a one-stop-shop access to the EU market and therefore helps crowdfunding platforms in overcoming the barriers they face operating cross-border.

          The proposal does not intend to interfere with national bespoke regimes or existing licenses, including those under the Markets in Financial Instruments Directive (MiFID II), the Payment Services Directive (PSD) and the Alternative Investment Fund Managers Directive (AIFMD), but rather to provide crowdfunding service providers with the possibility to apply for an EU label that empowers them to scale up their operations throughout the Union under certain conditions.

          Scope: the proposal applies to crowdfunding services involving financial remuneration for investors. Donation and reward-based crowdfunding are excluded from the scope of this initiative, as they cannot be considered financial services. The proposal does not include in its scope consumers lending for consumption purposes.

          Effective and prudent management: crowdfunding service providers must at all times comply with the organisational requirements, while natural persons having the power to manage a crowdfunding service provider should have appropriate skills and professional experience. A crowdfunding service provider must maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps designed to prevent conflicts of interest from adversely affecting the interests of its clients.

          Authorisation and monitoring: the proposal provides uniform, proportionate and directly applicable requirements for authorisation and a single point of supervision. Crowdfunding service providers will provide their services under the supervision of the European Securities and Markets Authority (ESMA).

          Investor protection and transparency: the proposal also aims to provide investors with the necessary information on crowdfunding, including the underlying risks. Accordingly, all information, including marketing communications, from crowdfunding service providers to clients must be complete, clear and correct. The proposal sets out an initial assessment of the appropriateness of a potential client and provides that platforms shall offer investors the possibility to simulate their ability to bear losses.

          The proposed regulation also provides for adequate safeguards to minimize the risk of money laundering and terrorist financing.

          BUDGETARY IMPLICATIONS: the preferred option holds implications in terms of costs and administrative burden for ESMA.

          Assuming that ESMA will be in charge of authorising and supervising 25 providers in the first full year of implementation (2020), there will be a cost impact (net of fees charged on the industry) of approximately EUR 1 637 000 in that year. This estimate also includes half of EUR 500 000 in one-off costs to be split over the first two years, used to setup the necessary IT systems.

          DELEGATED ACTS: the proposal contains provisions empowering the Commission to adopt delegated acts in accordance with Article 290 of the Treaty on the Functioning of the European Union.

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