The crowdfunding regulatory framework in the European Union and the United States

Abstract

Both in the US and the EU, crowdfunding legal framework has lately been subject to many regulatory changes. In the EU, the Regulation on European Crowdfunding Service Providers (ECSP) for business entered into force on 10 November 2020. and will enter into application on 10 November 2021, applying directly across the EU. The initiative was part of the European Commission’s fintech action plan and the mid-term review of the capital markets union action plan. At the same time, in the US, in 2020 the Securities and Exchange Commission decided to amend its rules in order to harmonize, simplify, and improve the multilayer and overly complex exempt offering framework, including crowdfunding. These amendments will promote capital formation and expand investment opportunities while preserving or improving important investor protections. The main objective of this article is to analyze and evaluate, from a comparative perspective, the EU and the US legal frameworks for crowdfunding offers- especially in light of the latest reforms. The article is based mostly on scrutinizing sources of law, academic literature, reports and data published by market authorities.