Brussels, 02/03/2015 (Agence Europe) - The European Banking Authority (EBA) believes that the existing financial rules could be put to use to create a better framework for crowdfunding activities.
According to the European authority, a convergence of the supervision practices on crowdfunding is “…desirable in order to avoid regulatory arbitrage, create a level-playing field, ensure that market participants can have confidence in this market innovation”, and it should be “based on existing EU law”, particularly for lending-based crowdfunding activities.
The EBA believes that the Payment Services Directive (2007/64) is the legislative text most feasibly applicable to aspects directly covering the payments-related aspects of crowdfunding activities. Amongst other things, the European legislator could clarify the provisions of the directive on the distinction between principal and regular activity, the definition of payment services and the exemption in the use of commercial agents.
As the 'lending activities' plank of crowdfunding players is not directly covered by European law, the European authority argues that from a regulatory point of view, “several types of risk” are not being dealt with, including “a lack of or insufficient requirements on any due diligence processes and assessment of borrowers' creditworthiness conducted by a platform, and a lack of or insufficient safeguards against platform default”.
On the other hand, the European authority concludes that crowdfunding actors are not comparable to banks and therefore do not need to be subject to the rules on credit institutions. This means that the money supplied by lenders to a crowdfunding platform do not fall under the heading of deposits by a national deposit guarantee scheme (directive 2014/49). (Mathieu Bion)