While the United States has often been at the forefront of financial innovation, the strictures of its regulatory system—and, in particular, its “black-line,” rules-based approach to securities law—have at times allowed other jurisdictions a head start. Nowhere has this been more the case than in crowdfunding. Over the past few years, beginning before the JOBS Act was even on the legislative agenda, crowdfunding platforms have begun to emerge and thrive across Europe.
The fact that European crowdfunding platforms have been able to launch and grow can be ascribed largely to the difference in the way that financial regulation works in non-U.S. jurisdictions. Every country has its own securities laws, but a common feature across Europe (notwithstanding the lack of formal harmonization at European Union level) is a more principles-based approach than exists in the United States. Many of the regulations were written in the past decade or two, as opposed to the 1930s, and they were constructed with a view to being adaptable to new technologies and new forms of finance. This has meant that, even in the absence of crowdfunding-specific legislation, entrepreneurs in the United Kingdom, the Netherlands, and elsewhere have found ways to create legal, effective crowdfunding platforms using existing laws.
This chapter gives an overview of how crowdfunding, specifically investment ...