New crowdfunding rules aimed at boosting cross-border business funding in the EU


On 5 October 2020 the European Parliament approved the European Crowdfunding Service Providers Regulation (the Regulation). The Regulation will apply to all European operators of internet-based crowdfunding platforms (so-called ‘Crowdfunding Service Providers’ or ‘CSPs’) facilitating crowdfunding offers of up to € 5,000,000, calculated over a period of 12 months per project owner. Crowdfunding offers by project owners that are consumers or with a consideration of more than € 5,000,000 are out of scope.

The Regulation provides for a European license regime for crowdfunding platforms. Licensed crowdfunding platforms are allowed to facilitate cross-border crowdfunding within the EU.  Such funding could take the form of loans or the offering of transferable securities or of other admitted instruments for crowdfunding purposes. Donation-based crowdfunding and reward-based crowdfunding, however, are not subject to the Regulation since they cannot be regarded as financial services. 

The Regulation shall come into force end 2021.

Key features

> Harmonisation: a single set of EU rules which will apply to crowdfunding services relating to crowdfunding offers (both loan-based and investment-based) of up to € 5,000,000 calculated over a period of 12 months per project owner.

> License requirement: current and prospective platforms will need authorisation from their national supervisor.

> European passport: crowdfunding platforms will be allowed to provide their services cross-border within the EU by means of a simple and straight-forward notification procedure.

> Information and transparency requirements: crowdfunding platforms must provide investors with a key investment information sheet (KIIS) drawn up by the project owner for each crowdfunding offer, or at platform level. Also, crowdfunding platforms must provide clear information about financial risks, charges, project selection criteria, credit scoring methods and defaults.

> Sophisticated and non-sophisticated investors: crowdfunding platforms must qualify their prospective investors as non-sophisticated or sophisticated investors. These definitions are linked to the definitions of the professional- and retail client under MiFID II. Before giving prospective non-sophisticated investors full access to invest in crowdfunding projects, the platform must assess whether the services offered are appropriate. A knowledge-test forms part of such assessment.

> Auto-investing: an important innovation is the explicit permission to implement auto-invest functions where the investor can set investment parameters (e.g. loan volume, term of the loan, range of interest and credit scoring) and instruct the platform to invest automatically.

> Secondary market functions: crowdfunding platforms may operate a bulletin board on which they allow their clients to advertise their interests in buying and selling loans, securities or admitted instruments for crowdfunding purposes that were originally offered on such platforms. This bulletin board should, however, not consist of an internal matching system which executes client orders in securities on a multilateral basis, unless the platform operator has a separate authorisation as an investment firm under MiFID II or as a regulated market.


Emerging companies (start-ups and scale-ups) and SMEs play a critical role in global economic development. They are the engines of innovation, modernisation and new job creation. Access to finance is one of the main hurdles for growth and development of their businesses. Given their relative small size, in the past, emerging companies and SMEs have tended to rely solely on traditional forms of financing such as Venture Capital, Private Equity and/or bank lending. Following the global financial crisis which started in 2008, we’ve seen a wider variety of forms and sources of finance, such as crowdfunding and peer-to-peer lending. Crowdfunding is increasingly viewed as an established and mature form of alternative finance. In our view, however, start-up and scale-up crowdfunding in the Netherlands was not able to win investors’ hearts on a massive scale so far. We’ve seen very successful crowdfunding campaigns recently, such as the success story of VanMoof, but in our experience these are rather exceptions. Generally speaking, in the Netherlands, crowdfunding volumes tend to be rather low. Possibly a pan-European solution will help crowdfunding services function smoothly, foster cross-border business funding and reignite interest of market participants again.


Should you seek assistance with regard to these new rules, please contact Vincent WismansJelmer Kruijt or your regular contact at VESPER Attorneys.