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Finally, new peer-to-peer lending and crowdfunding regulation is coming to Europe – and Eurocrowd members have had a front row seat to the new regime.
The European Crowdfunding Service-Providers Regulation (ECSPR) aims to transform the European business lending and investment-based crowdfunding market, by making it easy for platforms to register in one place, but operate in all of the 27 European member states and to carry out cross-border transactions. This is a major step forward for European P2Ps, but it didn’t happen overnight.
For the past nine years, the European Crowdfunding Network – or Eurocrowd – has been working closely with the European Commission (EC) to bring P2P lending and crowdfunding into the mainstream, and to make it easier for platforms to do business across Europe.
“We had a huge problem of access to finance for small and medium sized companies across the European Union,” explains Oliver Gajda, executive director of Eurocrowd.
“Back in 2013, any new idea that looked interesting was at least being discussed. And so we were able to start a dialogue in Brussels and to offer an alternative way of financing small companies.”
Within a year of this initial intervention by Eurocrowd, the EC had built a team dedicated to learning more about crowdfunding and P2P lending. This was the beginning of a close relationship between policymakers at the EC and Eurocrowd, which continues to this day.
Eurocrowd works closely with its members to collect information and support EC policy makers. When the Commission had questions about how P2P lending works, Eurocrowd fed this back to its members who were able to answer with real world examples.
“We were able to create some very interesting results,” Gajda says. “Since then, the market has developed, and our members have developed.”
While some individual countries passed laws to regulate crowdfunding as early as 2012, the launch of the ECSPR was the first time that a single law would be applicable to all P2P lenders across Europe.
The regulations were finally signed off in late 2020, before becoming law in late 2021. A one-year transition period will end in November 2022.
“Our members were very involved with this, and were able to provide very detailed information and insight to all parties in the negotiation,” says Gajda. “We ensured that there would be good practice that leads to scalability.”
Eurocrowd has been instrumental in bringing this regulation to the EU. It has led its members through the entire process and continues to offer advice and guidance to its members today, with unparalleled access to the lawmakers and regulators.
“This was a time when small- and medium-sized enterprise (SME) finance was lacking,” says Gajda. “And there was basically no real data on alternative lending and investing. But the concept was very interesting and the need for creating fast access to finance for all types of businesses or ventures was really important.
“That’s why Eurocrowd was founded, with the goal to represent this nascent industry towards policymakers in Brussels.”
Within less than a decade, Eurocrowd has done more than most for European P2P, and its members have reaped the benefits. As the ECSPR transition period comes to an end, there has never been a better time to join Eurocrowd and usher in a new era for P2P in Europe.
