Marketplace Lending and Investing in Europe and the EC Proposal for a Regulation on European Crowdfunding Service Providers for Businesses

Crowdfunding is a fast-growing phenomenon potentially improving financial inclusion and gathering the attention of worldwide regulators for its potential but also for its risks. Regulatory responses in Member States have been extremely varied, at the expenses of cross-border activity, equal investor protection and the formation of a true Single Market in Europe despite the Capital Markets Union Project. The recent European Commission Proposal for a regulation on European Crowdfunding Service Providers (ECSP) for businesses has aimed at fixing these shortcomings but also presents some flaws. The present chapter describes the ECSP Regulation and critically analyzes the same, underlying pros and cons and possible adjustments. Attention is also given to the revisions proposed by the European Parliament and Council of the European Union, which, although positively filling some gaps, show a different perspective and end up delineating a new but confused picture of crowdfunding in Europe. The chapter has been updated to the final text of the Regulation eventually adopted in October 2020.