On February 26, 2015, the European Banking Authority (“EBA“) published an opinion on lending-based crowdfunding. The opinion notes that certain Member States (France, Italy, Spain and the UK) have created specific regulations to address risks arising from crowdfunding. Italy’s regulation only covers investment-based crowdfunding. In Spain, the draft law in the final approval stages. The EBA concludes that the convergence of practices across the EU for the supervision of crowdfunding is desirable in order to avoid regulatory arbitrage, create a level playing field, ensure that market participants can have confidence in crowdfunding, and contribute to the single European market.

The EBA considers that crowdfunding, whilst still at an early stage, should be regulated by existing legislation, the most relevant being the Payment Services Directive (the “Directive“), but acknowledges that the lending aspects of crowdfunding are not regulated by EU law.

The EBA also stated that the business models of lending-based crowdfunding platforms do not fall inside the perimeter of credit institutions with the result that funds provided by lenders to crowdfunding platforms would not qualify as deposits eligible for protection under a deposit guarantee scheme, representing a further risk to lenders.  Opinion.