ESMA updates rules on SPVs in crowdfunding and P2P

The European Securities and Markets Authority (ESMA) has clarified its definition of special purpose vehicles (SPVs) in the crowdfunding and peer-to-peer lending space, as the European Crowdfunding Service Providers Regulation (ECSPR) is rolled out across the continent.

In a Q and A document, ESMA responded to the question: when should an entity be considered as an SPV?

In response, the regulator said that it defines SPV as  “an entity created solely for, or which solely serves the purpose of, a securitisation”.

ESMA noted that the ECSPR considers that if an entity is created or used for the purpose of the transaction funded by crowdlending investors, this entity “should be regarded as a SPV”. The SPV must comply with the ECSPR rules on marketing.

ESMA also responded to the question “Can a crowdfunding service provider (CSP) hold a participation in a SPV?

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To this, ESMA said that crowdlenders “should operate as neutral intermediaries between clients on their crowdfunding platforms”. This means that crowdfunding platforms cannot participate in SPVs unless the crowdlender can prove that it is acting only as a neutral intermediary in the transaction. Specifically, ESMA said that the crowdfunding service provider should not financially benefit from the creation of an SPV.

“In practice, the nature of the participation of the CSP in a SPV and its potential impact on the neutrality of the CSP shall be assessed on a case-by-case basis by the competent authority,” said ESMA.

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Crowdlending lobbyist group Eurocrowd said that it “welcomes” the latest update from ESMA and “looks forward to further clarifications on ECSPR to enable the fast and professional implementation in the market”.

The ECSPR rules were introduced in November 2021, and all nationally licensed crowdfunding and P2P lending platforms must attain an ECSPR licence by November 2023. This licence allows them to operate across the entire trading bloc with ease.

The regulations aim to standardise the way that P2P and crowdfunding platforms across the EU, and promote transparency for both investors and borrowers.

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