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The European Markets and Securities Authority (ESMA) has given platforms another year to become compliant with incoming crowdfunding and P2P regulations.
The regulations were finalised in late 2020 and became law in late 2021. A one-year transition period was initially set to end in November 2022.
However, the ESMA has now extended the transition deadline to November 2023.
The European crowdfunding service providers regulation (ECSPR) aims to bring together all nationally-regulated P2P and crowdfunding platforms in Europe in one place, as well as allowing them to operate in all of the 27 European member states and to carry out cross-border transactions.
Read more: European P2P platforms see rising volumes
According to the ESMA regulations, as long as the transition period is in place, crowdfunding service providers may continue to do business in accordance with their national law.
Trade body Eurocrowd has welcomed the extension as it gives service providers more time to implement the new law. However, it warned that the delay could result in market distortion and consumer harm.
“European retail investors will be subjected to an untransparent two-tier system with different regulatory and consumer protection rules for the same service for an additional year,” said Oliver Gajda, executive director of Eurocrowd.
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“We also believe that the extension may distort competition in some markets, as a large number of operators in many member states have already adapted to the new regulation and are ready to launch their services under ECSPR in 2022.
“The delay results directly in the failure of some national policy makers and competent authorities to quickly adapt to the new European law, but it will be European citizens and crowdfunding service operators that have to carry the burden. ”
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