Crowdfunding

Crowdfunding is an alternative form of financing that connects those who can give, lend or invest money directly with those who need financing for a specific project. It usually refers to public online calls to contribute finance to specific projects. Several crowdfunding models have emerged within the European Union over the past few years (donation-based crowdfunding, lending-based crowdfunding, investment-based crowdfunding, reward-based crowdfunding,…), but only some of them currently fall within the scope of the laws and regulations of the financial sector, depending on the characteristics of the platform, on a case-by-case basis.

In order to foster the development of crowdfunding platforms within the European Union, the European Commission presented in March 2018 a proposal for a regulation on European Crowdfunding Service Providers.

The Regulation (EU) 2020/1503 of the European Parliament and of the Council of 7 October 2020 on European Crowdfunding Service Providers for business and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937 (the “Regulation”) was published at the Official Journal on 20 October 2020 and will be directly applicable in all Member States as of 10 November 2021.

The Regulation only applies to crowdfunding services provided to non-consumer project owners relating to offers for an amount of up to EUR 5 000 000 calculated over a period of 12 months per project owner. The Regulation, once applicable, will create a new legal status of European Crowdfunding Service Providers (ECSP) and will allow ECSP to apply for an EU passport, based on a single set of rules. The investors on crowdfunding platforms will benefit from a strengthened protection regime based on clear rules on, namely, information disclosures for project owners and crowdfunding platforms, in the form of a “key investment information sheet”, marketing communication, governance and risk management and harmonised supervision.

As of 10 November 2021, the provision of crowdfunding services from Luxembourg will be subject to the obtention of a license as ECSP as well as the prudential supervision of the CSSF. Should an ECSP intend to provide payment services in addition to the crowdfunding services, a separate license under the Law of 10 November 2009 on payment services may be required.

Any contact request regarding Crowdfunding must be made via the following email address: crowdfunding@cssf.lu

Documentation

Laws, regulations and directives