Over the past decade, crowdfunding platforms have developed in the world and in the Baltic states as a way of attracting investment on more favourable conditions than from banks. In Estonia, from November, such companies have to apply for a licence from the national banking watchdog, Estonian public broadcaster ERR reports.
The requirement comes from the EU crowdfunding regulation, which is to enter into force on November 10. According to the piece of legislation, there will be a year’s period of grace to obtain the license for existing crowdfunding platforms in EU member states. Kilvar Kessler, who heads the board of the Estonian Financial Supervision Authority, has noted that the institution has been working on this basis for some time now.
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«Opening of the market means uniform conditions for crowdfunding companies to operate in the European market. In particular, a common set of investor protection requirements will be established in crowdfunding through the obligation to disclose information to investors, prevention and mitigation of conflicts of interest for crowdfunding companies, and the management of technological risks,» Kilvar Kessler explained. The official noted that it will be up to the financial watchdog to monitor compliance with the regulation’s requirements after authorization is received for that crowdfunding body as well.
From the point of view of investors, the new order in the investment/donation niche will not eliminate the risk for investors that a crowdfunding project will fail, however, nor that an investor could lose all or part of an investment, ERR reports.
Estonian crowdfunding firms to be required licence from regulator
