With respect to Regulation (EU) 2020/1503 (the “Crowdfunding Regulation”), crowdfunding service providers that provide their services only on a national basis currently benefit from a transitional period that will expire on the 10th November 2022.
On the 19th May 2022, the European Securities and Markets Authority (“ESMA”) published its final report, titled “ESMA’s Technical Advice to the Commission on the possibility to extend the transitional period pursuant to Article 48(3) of Regulation (EU) 2020/1503” (the “Report”), whereby ESMA discusses the application of the Crowdfunding Regulation to crowdfunding service providers that provide their services only on a national basis as well as the possibility of extending the 10th November 2022 transitional period.
In the Report, ESMA acknowledges that extending the transitional period would delay the application of harmonised investor protection rules, however it also points out that the risks at stake for the European crowdfunding market as a whole are significant in case an extension is not implemented. For this reason, ESMA declared in the Report that it supports the granting of the extension of the transitional period. At the same time, ESMA is of the view that such extension shall be designed:
- to avoid that it triggers any further unjustified delay in the transition to Regulation (EU) 2020/1503 (the “ECSPR”); and
- to ensure that no existing crowdfunding provider with a pending authorisation request ends up getting its activities suspended.
Consequently, ESMA suggests that the European Commission should explore the possibility to extend the transitional period only to the benefit of crowdfunding service providers currently operating under national law and which have applied for authorisation pursuant to the ECSPR before the end of the current transitional period. In this regard, ESMA suggests that such extension should apply to crowdfunding providers which have applied for authorisation pursuant to the ECSPR by 1st October 2022.
In view of the above, in its Report, ESMA strongly encourages European crowdfunding service providers currently operating under national law to accelerate their transition to the regime deriving from the Crowdfunding Regulation by filing relevant applications to their national competent authority as soon as possible.
Please feel free to contact us should you require any assistance in relation to crowdfunding service providers applications.