Revised proposal for an EU crowdfunding passport provides for EU-wide ICOs
Autor: Stefan Paulmayer
We had informed you in July about the proposal for an EU crowdfunding framework. Pursuant to this proposal, crowdfunding service providers would be entitled to the cross-border offering of crowdfunding-projects to investors throughout the European Union. As alternative to existing national and usually not harmonised crowdfunding rules, this new regime would serve to facilitate Europe-wide fundraising campaigns.
A Committee of the European Parliament has meanwhile revised the proposal for the EU Crowdfunding Regulation. The revised draft contains some substantial changes.
In the following, we have summarised the key changes of the revised proposal:
- The application of the new crowdfunding regime shall be extended to all crowdfunding offers of up to EUR 8 mn (per 12 months’ period). The initial proposal provided for a limitation of offers up to EUR 1 mn.
- Initial Coin Offerings (ICOs) shall be included in the scope of crowdfunding projects covered by the Crowdfunding Regulation. This would allow for the European-wide offer of ICOs to the same harmonised conditions under a Single European Passport. The Crowdfunding Regulation would only cover the initial offering though. A secondary market for coins and tokens could still be subject to separate national rules as introduced by Member States.
- As regards the facilitation of granting of loans it shall be distinguished between a mere “matchmaking” service and additional services including determining the “packaging” and “pricing” of the crowdfunding offers. Information / disclosure obligations would differ depending on the activities provided.
- Crowdfunding service providers shall be entitled to provide the service of investment advice with respect to tradable securities of project owners without the need to obtain a MiFID II-license.
- The registration as crowdfunding service provider shall be the responsibility of national authorities instead of European Securities and Market Authority (ESMA).
- In return for the extended possibilities that the revised Crowdfunding Regulation would offer to crowdfunding service providers, certain governance obligations shall be increased and new sanctions shall be introduced. These include the possibility of periodic penalty payments to compel the suspension of any illegal activities.
- Third-country crowdfunding service providers shall be entitled to operate on the European market provided that certain conditions are met. These include an EU Commission decision on the equivalence with regards to the home country of the provider and the service provider being supervised in his home country.
We believe that the revised proposal – if accepted – would greatly benefit a unified Capital Markets Union (CMU). It would enable innovative forms of fundraising in a regulated environment.
In particular, the extension of the EUR 1 mn threshold for the application of the new regime to EUR 8 mn (within a 12 months’ period) is much appreciated. Also, the extension to ICOs would be a most spectacular innovation that may help to bypass current uncertainties under national law.