The Estonian Financial Supervision Authority submitted a proposal to the Ministry of Finance on Thursday to consider regulating the activity of crowdfunding businesses by law.
"Rapidly developing crowdfunding offers new alternative possibilities aside from the regulated banking, fund and investment services markets," said Andre Nõmm, a board member at the Financial Supervision Authority. "In the domain of financial services, opportunities and risks go hand in hand. We believe that more precise addressing of requirements and risks by means of law will help the financial services market become more transparent, stable and also effective."
Nõmm noted that as crowdfunding had not yet been harmonized on the EU level, several countries had begun to regulate this field on their own due to its rapid development. "We believe that our draft legislation will help provide a framework to further discussion on regulating crowdfunding and that a balanced solution can be found in an open and inclusive debate," he said.
"We believe that the crowdfunding market in the EU must be opened up, as we see it as a good opportunity to open up the potential of the common market to our entrepreneurs," Nõmm added.
Currently, crowdfunding businesses are not subject to financial supervision and the Financial Supervision Authority proposes that they not be subjected to it for now. Authorization from the Financial Supervision Authority would not be necessary to run a crowdfunding platform either.
The legislative initiative is aimed first and foremost at protecting crowdfunding businesses' customers, explained the financial authority. The proposals listed primarily have to do with the presentation of data and its transparency, protection of personal data, managing of confict of interest as well as ensuring the separation of assets. Additionally, crowdfunding businesses should take measures to control the risks with which the financial sector is faced, such as prevent money laundering.
Editor: Editor: Aili Vahtla