The MFSA has introduced a new application to license crowdfunding service providers.
Providers are now able to offer crowdfunding services on a cross-border basis throughout the EU without needing to obtain separate authorisation in each Member State. This development is part of the EU’s Capital Markets Union economic policy initiative.
The Regulation on Crowdfunding lays down uniform rules across the EU for the provision of investment-based and lending-based crowdfunding services related to business financing. Said platforms will need to be authorised by the national competent authority (NCA) in the EU Member State in which they are established.
In line with this, the MFSA has introduced a new application to start the authorisation process for crowdfunding service providers.
Start-ups, small and medium enterprises, and innovative companies often have difficulty accessing funds via traditional means such as bank loans, or through the capital markets, which can be both time-consuming and costly. Crowdfunding service providers enable them to connect to and raise funds from multiple investors, usually via digital platforms.
“This is a very welcome development for the sector, bringing about much-needed clarity. This new legislation benefits the businesses that need to raise funds, the investors, through appropriate safeguards for consumer protection and ultimately stimulates the wider economy, said MFSA Head of Securities and Markets Doreen Balzan, adding that businesses had previously faced high compliance and operational costs when using crowdfunding.
“We believe that Malta is well placed to host such platforms, being a jurisdiction which is predominantly composed of SMEs and inclined towards fintech-driven entities,” she said.
The new Crowdfunding Regulation only applies to investment-based and lending-based crowdfunding services. Other types of crowdfunding, such as reward and donation-based crowdfunding, do not fall within the scope of this legislation.
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The new rules come into effect from 1st January 2024