The crowdfunding regulatory framework in the European Union and the United States


  • Łukasz Chyla Institute of Private Company Law at the Faculty of Law and Administration of the Jagiellonian University http://orcid.org/0000-0001-7353-8125
Keywords: crowdfunding; prospectus exemptions; primary capital markets.

Abstract

Both in the US and the EU, crowdfunding legal framework has lately been subject to many regulatory changes.  In the EU, the Regulation on European Crowdfunding Service Providers (ECSP) for business entered into force on 10 November 2020. and will enter into application on 10 November 2021, applying directly across the EU. The initiative was part of the European Commission’s fintech action plan and the mid-term review of the capital markets union action plan. At the same time, in the US, in 2020 the Securities and Exchange Commission decided to amend its rules in order to harmonize, simplify, and improve the multilayer and overly complex exempt offering framework, including crowdfunding. These amendments will promote capital formation and expand investment opportunities while preserving or improving important investor protections. The main objective of this article is to analyze and evaluate, from a comparative perspective, the EU and the US legal frameworks for crowdfunding offers- especially in light of the latest reforms. The article is based mostly on scrutinizing sources of law, academic literature, reports and data published by market authorities.

References

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Regulations and Reports:

Amendments for Small and Additional Issues Exemptions under the Securities Act (Regulation A), Release No. 33-9741 (March 25, 2015) [80 FR 21806 (Apr. 20, 2015)].
A Financial System That Creates Economic Opportunities - Capital Markets (October 2017).
Capital Markets Union- Communication of the Commission of 30 September 2015, entitled ‘Action Plan on Building a Capital Markets Union’.
Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC.
Divisions of Corporation Finance and Economic and Risk Analysis: 2020 Regulation A Lookback Study and Offering Limit Review Analysis.
ESMA Document no 31-62-1193 (issued 02.03.2020).
Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC.
Securities Act of 1933 (15 U.S.C. § 77a et seq.)
Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.)
SEC Regulation A (17 C.F.R. §230.251 et seq.)
SEC Regulation D (17 C.F.R. §230.501 et seq.)
SEC Regulation Crowdfunding (17 C.F.R. §227.100 et seq.)
SEC Office of the Advocate for Small Business Capital Formation Annual Report for Fiscal Year 2019.
SEC Proposal: Facilitating Capital Formation and Expanding Investment Opportunities by Improving Access to Capital in Private Markets, SEC Release Nos. 33-10763; 34-88321; File No. S7-05-20.
SEC Proposed Rule on Facilitating Capital Formation and Expanding Investment Opportunities by Improving Access to Capital in Private Markets, Release Nos. 33-10763 (March 31, 2020).
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SEC Report to the Commission: Regulation Crowdfunding (June 18, 2019).
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The 3rd European Alternative Finance Industry Report (2017), Cambridge Center for Alternative Finance, University of Cambridge.

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Published
2021-04-30
How to Cite
Chyla, Łukasz. (2021). The crowdfunding regulatory framework in the European Union and the United States. Fundamental and Applied Researches in Practice of Leading Scientific Schools, 44(2), 48-57. Retrieved from https://farplss.org/index.php/journal/article/view/787