The Challenges Awaiting the European Crowdfunding Services Providers Regulation: Ready for Launch?

The Regulation on European Crowdfunding Services Providers for Business (ECSPR), adopted in October 2020, has started applying on 10 March 2022, in a period in history regarded as particularly complex for the entire world and for Europe because of the post-pandemic effects. Before that, the UK has decided to leave the European dream and the difficult negotiations have left the financial sector with uncertainty about the legal treatment of most financial services, including crowdfunding operations, across such new borders. At the same time, the EU is moving forward in its integration process, adopting several actions within the Capital Markets Union (CMU) action plan: one of the main goals of the CMU is indeed the adaptation of existing financial regulation to SMEs’ needs. Some legislative initiatives proposed, such as the Markets in Crypto-Assets Regulation (MiCAR), can be regarded as potentially favouring crowdfunding platforms’ competitors, since they all provide services and in particular financing to SMEs. Moreover, climate change effects are becoming more and more severe, also in Europe, forcing international, European and national regulators to implement reforms and sustainable considerations in financial regulation. Considering this background, it is important to assess whether the ECSPR will be able to show the resilience needed to face all these challenges, with its text presenting already adequate responses or tools to adapt. The present paper will analyse the most relevant parts of the ECSPR trying to assess whether such newly adopted regime has the potential, considering its architecture, scope and specific rules, to successfully deal with and overcome the highlighted challenges

Marketplace Lending as a New Means of Raising Capital in the Internal Market: True Disintermediation or Reintermediation?

Marketplace lending,enabled by technological innovation, represents a new opportunity for raising capital.It is regarded by the EU as having the potential to expand the financing options of SMEs and improve the integration of the Internal Capital Market. However,applying traditional legal categories and existing laws to marketplace lending and to other examples of the new \u201cplatform economy\u201d is not simple. Member States have adopted very different regulatory responses towards marketplace lending, with negative effects on the internal market.The essence of the regulatory dilemma consists in determining whether marketplace lending represents \u2013as it has been depicted by platforms themselves, particularly in contractual agreements through disclaimers \u2013 a true disintermediated method of raising capital, an innovative form of intermediation, or a traditional kind of intermediation disguised in new and fashionable clothing.The answer to this question has relevant consequences for the regulatory treatment of marketplace lending and it requires a uniform response in the EU, at least with respect to the largest cross-border platforms. After briefly describing marketplace lending in Europe and the various current trends in regulating it, the paper discusses the main regulatory issues from the perspective of the above-mentioned issues.It analyzes the recently adopted Regulation on European Crowdfunding Services Providers in order to verify whether the regulatory choices that it has made are effective,both for the further development of marketplace lending and for addressing the associated risks

La Proposta di regolamento europeo relativo ai fornitori europei di servizi di crowdfunding per le imprese

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Sintesi del lavoro

Il marketplace lending \ue8 uno fra i fenomeni pi\uf9 interessanti in ambito FinTech, non solo per la rapidit\ue0 con cui negli ultimi anni, specie in Paesi diversi dall\u2019Italia, \ue8 venuto ad espandersi in termini di volumi (sia pure ancora limitati quanto a valore assoluto), ma soprattutto per il carattere innovativo dei modelli di business in cui il fenomeno stesso si traduce: modelli in grado di mettere in discussione consolidate partizioni e categorie del settore finanziario, ponendo rilevanti questioni dal punto di vista della strategia regolatoria. Si tratta di una forma di finanziamento alternativa a quelle tradizionali e riconducibile, per un verso, all\u2019applicazione al settore dei servizi finanziari di tecniche di intermediazione digitale sviluppate nell\u2019e-commerce e, per un altro, al pi\uf9 ampio ambito del crowdfunding. Nel \u201cgenere\u201d crowdfunding, e al di l\ue0 delle scelte terminologiche, la \u201cspecie\u201d in discorso si connota per l\u2019essere imperniata sulla raccolta di finanziamenti da parte di soggetti privati (individui o imprese), effettuata tramite una piattaforma, normalmente accessibile via internet. Si \ue8 scelto di riferirsi al fenomeno in discorso con il termine marketplace lending perch\ue9 esso ha il pregio di mettere l\u2019accento sul profilo che pu\uf2 dirsi pi\uf9 peculiare di tale nuovo modello operativo: il trattarsi di una attivit\ue0 organizzata in modo tale da assemblare (in modo nuovo e originale rispetto ai modelli tradizionali grazie alla presenza della piattaforma) la prospettiva creditizia (lending) con quella del mercato (marketplace). Ci troviamo di fronte, infatti, a un modello di business nuovo, che - grazie all\u2019innovazione tecnologica e, in particolare, all\u2019utilizzo di tecnologie abilitanti quali la struttura di piattaforma e i big data analytics - consente il soddisfacimento di bisogni \u201cclassicamente\u201d finanziari (come il bisogno di finanziamento, di singoli come di enti collettivi, e quello di investimento) ma con modalit\ue0 differenti da quelle tradizionali. E, a giudicare dalle sempre maggiori dimensioni che il marketplace lending \ue8 andato negli anni assumendo a livello mondiale, sembra trattarsi, quantomeno prima facie, di modalit\ue0 che rispondono in modo efficace a bisogni finanziari concreti, nel senso che la presenza delle piattaforme genera una serie di vantaggi sia per i crowd-borrower sia per i crowd-investor, producendo, tuttavia, anche potenziali nuovi rischi di lesione di quegli stessi interessi non da oggi alla base della regolazione del sistema finanziario (tutela del risparmio, degli investitori e, pi\uf9 in generale, dei clienti; riduzione di asimmetrie informative, azzardo morale e selezione avversa; stabilit\ue0, buon funzionamento e competitivit\ue0 del sistema finanziario; fiducia nel sistema medesimo). Ci\uf2 conduce alla necessit\ue0 non solo di ricondurre questo tipo di attivit\ue0 a tale alveo, ma anche di farlo, date le peculiarit\ue0 del modello di business in discorso, con una normativa dedicata e disegnata secondo un approccio activity-based, che risponda ad una logica funzionale (in ragione delle peculiari funzioni svolte dalle piattaforme), proporzionale (in considerazione dei volumi, complessit\ue0 dell\u2019attivit\ue0 e dei prodotti) e in grado di tutelare sia i crowd-investor che i crowd-borrower.Marketplace lending is one of the most interesting phenomena in the FinTech area, not only for the registered growth rates in terms of volumes in the last few years, especially in countries other than Italy, but also and especially for the innovative character of the business models deployed: models able to cast doubts on the traditional sectorial separations and categories of the financial sector, therefore raising relevant issues from the point of view of regulatory strategies. It represents an alternative form of financing which can be reconnected, on the one hand, to the application of digital intermediation techniques developed in the e-commerce area and, on the other hand, to the more general crowdfunding phenomenon. In fact, marketplace lending is characterized, within the crowdfunding genus, by realizing the collection of financing by private entities (individuals or firms), through a digital platform (generally accessible by the internet). We have decided to refer to such phenomenon with the term \u2018marketplace lending\u2019, which allows to underline the most peculiar feature of this business model, i.e. being an activity organized in such a way to put together (in a new and original way, compared to traditional intermediaries\u2019 models, thanks to the presence of platforms) the lending perspective with the one of capital markets and trading venues.. We are in fact observing a new business model, which - thanks to technological innovation and, in particular, to the use of enabling technologies (such as platform structures and big data analytics) \u2013 allows the fulfillment of classical financial needs (e.g. the financing needs of individuals or legal persons and investment needs), but with models and structures different from traditional ones. Furthermore, considering the incredible and constant growth in size of marketplace lending worldwide, such new models and structures seem, at least at first sight, to effectively respond to concrete financial needs, with the platform presence creating a range of advantages both for crowd-borrowers and for crowd-investors. Nonetheless, the same also creates potential new risks, endangering in particular the same interests traditionally grounding and protected by financial regulation (depositor and investor protection and, more generally, client protection; reduction of asymmetric information, moral hazard and adverse selection problems; stability, correct functioning and competitiveness of the financial system; trust in the financial system). This highlights the need, not only to place marketplace lending within the scope of financial regulation, but also to do so in consideration of the peculiar features of this business model, through an ad hoc regime, designed employing an activity-based approach and a functional (therefore, also reflecting the particular functions performed by digital platforms) and proportional perspective (in consideration of volumes, complexity of activities and products) as well as able to protect both crowd-investors and crowdborrowers

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

La regolazione del FinTech tra innovazione, esigenze di tutela e level-playing field: l\u2019inesplorato caso dell\u2019invoice trading

Among FinTech activities, invoice trading \u2013 i.e. the advance payment of invoices (and purchase of the corresponding credit) by investors in favour of entrepreneurs through an online platform \u2013 has not received much attention from academics or regulators yet. The paper, after a preliminary description of the prevailing business models adopted by invoice trading platforms in Italy, aims at exploring the main issues related to the legal qualification of such activity and providers as well as at assessing whether the Italian regulatory response appears adequate or requires instead revisions and adaptations

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\u2019 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 \u2018light\u2019-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