According to data from the Crowdfunding Observatory of Milan Politecnico University, the Italian market is worth around €430 million, and this year has seen a 27% growth in capital raising compared to 2021. It is a pity, therefore, that Italy is putting the entire sector at risk due to the excessive slowness that is unfortunately often typical of our government bodies.
From November 2021 to date, in fact, our country has not been able to fully implement the new European regulation on European Crowdfunding Service Providers, in practice the set of new rules that created the single European market and concerns both equity crowdfunding and lending.
The failure to adopt an implementing legislative decree in fact prevents Consob and Banca d'Italia from receiving formal applications for authorisation to operate as crowdfunding service providers under the ECSP Regulation and the related Delegated Regulations, thus also impeding the evaluation process of new platforms.
Last Chance?
In a joint communication dated 21 October, the Bank of Italy and Consob made themselves available for informal discussions to guide operators interested in the future submission of authorisation applications, also providing clarifications on the information and documentation elements to be attached to the applications.
The extension of the transitional regime for crowdfunding until 2023 was welcomed by the sector's operators, who had repeatedly emphasised in recent months how the climate of regulatory uncertainty was penalising national platforms disproportionately with respect to competitors based in other Member States that, unlike Italy, had already implemented the provisions of the ECSP Regulation.
If the extension of the transitional regime allows operators to breathe a momentary sigh of relief, it must not become an alibi for postponing a leap in quality and competence in the procedures of a sector that, at a European level, is being called upon to prove its maturity. Not least because the time needed to equip existing platforms with the processes and skills required to comply with the European crowdfunding regulation will not be short, especially in the case of smaller realities.
What could (or should) happen
What our country should do and is not doing is, therefore, to appoint a national regulator as soon as possible, an authority that is able to grant European authorisations to existing Italian platforms or to those that will be created in the future so that they can operate throughout the EU.
The introduction of a comprehensive crowdfunding regulation will probably have the effect of favouring the entry into the national market of more structured operators able, through multi-service platforms, to offer both lending and equity crowdfunding services.
Moreover, the need to create control systems capable of supporting the new activities of investment selection (i.e. due diligence and risk assessment) and of verifying their appropriateness with respect to the profile of potential investors (i.e. conducting due diligence tests) will play an increasingly central role. It will therefore be important to develop information systems and platforms that can ensure timely compliance with the strict disclosure and transparency requirements introduced by the ECSP Regulation.
For platforms that are scarcely or not at all active today, it will become more complicated to remain in the market. We could see a phase of M&A between platforms, which will lead to the creation of stronger Italian realities capable of withstanding competition from foreign ones, in Italy as in the rest of the Union.
At stake is also the possibility of collaborating in a more replicable and scalable way, first and foremost with the European Investment Bank, precisely because of the existence of shared rules at European level.
Therefore, if the new ECSP Regulation moves in line with the now acclaimed principles of the Capital Market Union, aiming to create a single EU financial market for crowdfunding, thereby implicitly recognising the value and function that crowdfunding in its various forms is destined to play, it is equally true that platforms will necessarily have to become more efficient and profitable, on pain of an unsustainable loss of competitiveness.