EU To Give Crowdfunding Startups A Passport


The European Commission floated the idea of issuing so-called “passports” for crowdfunding startups in an effort to drive growth in the financial technology sector.

According to news from Reuters, citing European Commission Vice President Valdis Dombrovskis, the idea is that if the startups have a license from the European Union (EU), it will help them expand in Europe.

“It will help them match investors and companies from all over the EU, giving more opportunities for firms and entrepreneurs to pitch their ideas to a wider base of funders,” Dombrovskis said.

Reuters noted that the European Commission laid out a range of measures to boost growth and create more jobs in the FinTech sector, but the crowdfunding passport idea was the only one offered up as draft legislation. With the U.K. leaving the bloc in 2019, Brussels wants to make the EU an attractive place for FinTechs. In the absence of a trade deal with the EU, U.K. FinTechs wouldn’t be able to provide services to customers in the EU.

“It’s more important that we develop capital markets across the EU, as there are going to be consequences from the EU’s largest market leaving the EU,” Dombrovskis said.

Under the draft proposal, a FinTech that wants to provide crowdfunding across the bloc would receive a passport license issued from the European Securities and Markets Authority. The European Commission’s proposal would cover crowdfunding of up to a million euros over the course of a year. If a company is looking to raise more, it would fall under the European Union’s existing securities rules, noted the report.

“Instead of having to comply with different regulatory regimes, platforms will have to comply with only one set of rules, both when operating in their home market and in other EU member states,” the Commission said. “For investors, the proposal will further provide legal certainty as regards the applicable investor protection rules.”


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