Qatar introduces first loan-based crowdfunding regulations
The Qatar Central Bank (QCB) has issued its first loan-based crowdfunding regulations, paving the way for peer-to-peer and crowdfunding platforms to expand into the country.
The QCB classifies loan-based crowdfunding platforms as “innovative” financial platforms which connect borrowers with multiple investors.
The new regulations are intended to boost the development of the country’s nascent fintech sector, by encouraging more platforms to launch.
“These platforms also contribute to the improvement of the financial sector by making the borrowing process more accessible, transparent, and efficient,” said a QCB spokesperson.
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“Through loan crowdfunding platforms, borrowers facing difficulties in securing traditional bank loans, such as small- and medium-sized enterprises, can access financing for their businesses and overcome challenges related to growth, expansion, and short-term financing.
“Additionally, investors on these platforms can diversity their portfolios and investments while actively supporting the businesses they care about.”
The central bank added that the regulation intends to safeguard the investors participating in crowdfunding campaigns, as well as protecting the financial system against the risk posed by those platforms.
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The QCB has also used the regulations to limit the scope of loan-based crowdfunding platforms. Donation-based or reward-based or equity-based crowdfunding activities are not covered by the regulations, and all transactions must take place via an electronic platform.
Real estate businesses and property investment crowdfunding campaigns are not covered by the regulations. Platforms are not allowed to raise deposits as defined under QCB law.
Once regulated, platforms will be able to market to retail investors regarding crowdfunding campaigns, grant credits or loans to investors or borrowers.
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