France is drafting a new law that aims to make the practice of pooling resources to fund private ventures easier and more competitive, but the lack of rules governing so-called 'crowdfunding' has prompted the European Commission to announce new legislation for "early next year".
On 4 September, French Finance Minister Pierre Moscovici presented a draft law which aimed to adapt the legal status of the participative financing platforms and improve their competitiveness in Europe.
A new project financing mode
Through online platforms, project-holders and individual investors are able to get in touch, helping innovative or cultural projects get off the ground more easily. The French government sees crowdfunding as an opportunity to boost the economy by supporting small enterprises and start-ups with credit.
Until now, crowdfunding platforms depended on the traditional stock market and bank regulation, an unadapted and overly rigid framework for this participative method of financing.
To make it easier for this new form of banking, the French government has decided to create a specific status for “participative financing advisors” that is more flexible than current methods.
“These new rules will help crowdfunding actors to grow rapidly”, says Francois Carbone of the Anaxago.com platform.
An expanding market
In Europe, crowdfunding platforms collected €446 million in 2011, €735 million in 2012 and allowed for the financing of 470,000 projects, according to the European Commission.
In France, studies have shown that crowdfunding projects may amount to €80 million in 2013, twice as much as the previous year.
However, crowdfunding platforms in other European countries will not benefit from this new flexible status, as it has not been harmonised on the European level.
Different European legislation
Other EU countries such as Italy, the UK and Austria are already working on crowdfunding rules but legislation remain very different across Europe.
This has caught the attention of the European Commission. Last June, Internal Market Commissioner Michel Barnier said the EU executive had started looking into the legislative disparities across European countries and whether national legislation needed to be streamlined.
"We intended to regulate crowdfunding sites, and a draft proposal will be presented early next year," Barnier told EURACTIV in an interview this week.