Since the entry into force of Regulation (EU) 2020/1503 of 7 October 2020 on European crowdfunding service providers for business (the “Crowdfunding Regulation”) on 10 November 2021, and its transposition into Luxembourg law by the Law of 25 February 2022, the legislative and regulatory framework for crowdfunding continues to advance.
EBA's final draft RTS
On 13 May 2022, the European Banking Authority (“EBA”) published its final draft Regulatory Technical Standards ("RTS") on credit scoring and pricing disclosure, credit risk assessment and risk management requirements for crowdfunding service providers. Article 19(7) of the Crowdfunding Regulation mandates the EBA to develop and draft such RTS, in close cooperation with ESMA.
The draft RTS (which EBA was mandated to develop in close cooperation with ESMA pursuant to Article 19(7) of the Crowdfunding Regulation) specifies:
- the elements to be included in the information to investors with respect to the description of the method used to calculate credit scores and pricing assigned to crowdfunding projects (Article 19(7)(a) of the Crowdfunding Regulation);
- the information and factors that crowdfunding service providers shall consider when carrying out credit risk assessment and when conducting a loan valuation as referred to in Article 4(4) of the Crowdfunding Regulation (Article 19(7)(b) of the Crowdfunding Regulation);
- the factors that crowdfunding service providers shall take into account to ensure that the price of loans facilitated on its platform are fair and appropriate (Article 19(7)(c) of the Crowdfunding Regulation) and,
- the content and governance of the policies and procedures required for the requirement specified in Article 19 and the risk management framework related to credit risk assessment as referred to in Article 4(4)(f) of the Crowdfunding Regulation.
These draft RTS will be submitted to the European Commission for endorsement, following which they will be submitted for scrutiny by the European Parliament and the Council, before being published in the Official Journal of the European Union.
In addition, on 20 May 2022, ESMA updated its Questions and Answers ("Q&As") in relation to the Crowdfunding Regulation. The update covers, inter alia, clarifications on various general provisions related to asset safekeeping services, payment services, tied agents and branches. A new Q&A has also been added in respect of investor protection, specifically relating to the role of crowdfunding service providers in relation to the drawing up and information contained in the key investment information sheet (KIIS).
On 10 June 2022, the CSSF issued a press release reminding any legal person, facilitating the financing of business activities by soliciting the general public through an online platform, that the transitional period provided by Article 48 of the Crowdfunding Regulation will come to an end on 10 November 2022. Pursuant to Article 48 of the Crowdfunding Regulation, existing crowdfunding service providers operating under national law which benefit from the transitional period may continue to provide services within the meaning of the Crowdfunding Regulation until they obtain authorisation in accordance with the Crowdfunding Regulation. The CSSF explained that Article 48 applies in Luxembourg even though there is no national law on crowdfunding. Platforms, qualifying as crowdfunding service providers within the meaning of the Crowdfunding Regulation before 10 November 2021, and thus benefiting from the transitional period, should inform the CSSF accordingly as soon as possible in view of obtaining an authorisation as a European crowdfunding service provider from the CSSF by 10 November 2022 at the latest.