European crowdfunding Association

European Commission on Crowdfunding: 3rd June 2013

?Many of the speakers highlighted the very interesting dynamics of crowdfinance and its derivatives. Of key importance is the reduction in intermediation costs between investors and entrepreneurs that democratic finance can offer. Furthermore it was added on numerous occasions, that crowdfunding and in particular, peer-to-peer funding, equity crowdfunding and debt-lending models place much needed competitive pressure on the established lenders – big-bank banking.

A key aspect that arose during discussions was that financial regulation is too complicated and inconsistent. Furthermore financial regulation as a whole suffers from silo thinking with such a wide range of law affected by crowdfinance. Given the complexity of financial regulation, there is fear in the EU that too much regulation could strangle the alternative finance sector or take the crowd out of crowdfunding and prevent the internet from enabling its more horizontal and decentralised innovations bringing in the crowd to pick up where the banking sector is failing.

Some of this regulation that is being proposed in various EU members, falls under existing regulation.crowdfunding-300x237 This is to protect users and provide certain levels of information without misleading information. There are also insurance implications amongst many other areas affected by crowdfinance.

The fear of British, French, Italian regulators, where the sector has grown most dramatically in the past few years, is fear the weakest and most financially illiterate will be hardest hit with most to lose and suffer the most. The lack of a track record makes it very difficult for regulators to know the consequences of this sector and also whether it is sustainable. Nevertheless, it was clear most of the speakers saw crowdfinance as an opportunity which requires simple, more horizontal legislation ensuring information provided by platforms and projects is readable and clearly understandable. It is vital, especially in such early days, that crowdfinance maintains trust of investors.

Another area which was highlighted several times, was the need for platforms to harness the power of the crowd to not only provide investment funds but also support and advice. The crowd needs to be better harnessed to evaluate and support projects – akin to what is seen in the world of venture capitalism. There is also a great deal of need to consider the implications for a secondary liquidity market and exit strategies for investors – something that is, as yet, quite unclear throughout the European Community.

The great thing about crowdfinance is that it promotes responsible citizenry who can actively get involved in community projects to develop a sense of identity and be part of something to feel proud of. To facilitate this, access to information about the social and environmental impact of projects as well as their financial return will become increasingly important.

Press Europ Crownd PDF Web-Vecto 2013cf-crowdfunding-platform-activity

More analysis

by Aeurelius

No. 6 Spending $15 billion on a program that would hire construction workers to help rehabilitate and refurbishing hundreds of thousands of foreclosed homes and businesses
This is TEMPORARY JOBS!!! and why in the hell is tax payers footing the bill for foreclosed homes? Are you a retarded or what?
No. 7 Creating the National Infrastructure Bank (capitalized with $10 billion), originally proposed in 2007, to help fund infrastructure via private and public capita
This does jack shit to create jobs. It is a slush fund.
No. 8 Creating a nationwide, interoperable wireless network for public safety, while expanding accessibility to high-speed wireless services
Private sector does internet better

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