New EU rules could see lenders expand to UK
The new European Crowdfunding Service Provider Regulation (ECSPR) could make the UK peer-to-peer lending market more competitive, as it allows EU lenders to raise funds and finance loans in non-EU countries.
This means that European lenders could vie for some of the UK’s P2P market share, once the regulations are more widely implemented.
The ECSPR came into effect in November 2021 and allows any European P2P and crowdfunding firms to operate across the EU without restriction. To date, just six platforms have been licensed under the new regulatory regime, including crowdfunding site Crowdcube and Netherlands-based P2P lender Lendahand Ethex.
Read more: P2P’s global evolution
However, Oliver Gajda, executive director of EuroCrowd, believes that many more platforms will become licensed in the coming months.
There are no restrictions on raising or delivering funds to non-EU countries such as the UK.
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Furthermore, special purpose vehicles can be used to finance illiquid assets with securities investments, such as bonds. This would allow EU crowdfunding and mini-bond platforms to market their products in the UK and to back UK funding projects.
“This a wanted side effect of ECSPR and will happen sooner or later,” Gajda says.
Read more: Transition period extended on ESMA crowdfunding regulations