The Crowdfunding Market in Europe and Challenges and Opportunities Ahead: the European Crowdfunding Services Providers Regulation, Coronavirus Pandemic, Brexit and Sustainability

The 2020/2021 has been a tough year for all, financial sector included. Crowdfunding has shown potential and resilience and has now ahead several challenges and opportunities to deal with. First of all, the longer-term effects of Coronavirus pandemic on the market, such as in terms of defaults and failures of project owners, reduced demand/offer, investors’ risk-adversity. Second, the shift from national regulation to the Regulation on European Crowdfunding Services Providers (ECSPR) for Business (entered into force in November 2020 and applicable starting November 2021), potentially entailing the formation of an integrated internal market and therefore growth, scale, diversification and competition but also efforts in adapting business models, internal systems and compliance. Third, Brexit: the British crowdfunding market is the biggest in Europe and the uncertainty about the legal treatment of crowdfunding operations left by the recent deal and ECSPR does not help assessing the implications for EU platforms. Fourth, sustainability: the EU is moving fast in integrating sustainability issues in its legal framework but the relevance of ESG considerations in the crowdfunding market is challenging because of the implied high costs (also for the ‘light’-intermediation platforms) and therefore also still under discussion, with no facilitations or ESG-related rules in the ECSPR. The paper, after analyzing such challenges, the ECSPR and its potential impact on the market, with special reference to the Italian one, will assess the ability of the resulting framework in dealing with the highlighted challenges.