The crowdfundingor crowdfundingis an alternative financing method in which individual contributorsgenerally via an online platform, provide funds for a project (real estate, solar panels, etc.), a company or an initiative (social for example). It can take several forms, such as donations, paid or unpaid loans, or capital participations, and is part of a specific legal framework governing crowdfunding intermediaries. THE online platformsacting as intermediaries (KissKissBankBank or Ulule), allow project leaders to raise funds directly from investors, often without going through traditional financial channels such as banks or institutional investors.
The emergence of cryptocurrencies has opened up new perspectives for crowdfunding, allowing the use of these assets for facilitate transactions between investors and project leaders.
In these new models, crowdfunding platforms are no longer limited to traditional fiat currencies and can integrate cryptocurrencies to raise funds.
The use of cryptocurrencies and blockchain in crowdfunding opens up new perspectives both for investors and project leaders. There blockchain technology allows to ensure the transparency of transactionstheir traceabilityand reduce costs associated with traditional intermediaries. Some companies have already integrated these advantages to offer innovative investment opportunities in various sectors.
One of the key benefits of blockchain in crowdfunding is the ability to split assets on an unprecedented scale. This technology opens the doors of financing to a greater number of investors, who can thus diversify their portfolio by purchasing shares of assets that they would not have been able to acquire in a traditional framework.
In this context where cryptocurrencies are disrupting traditional economic models, it is essential to question the scope and adaptability of legal framework currently available to crowdfunding platforms based on these digital assets, and to determine whether existing regulations are capable of protect investors while encouraging innovation, in particular the so-called PSFP regulation, which regulates crowdfunding service providers in the European Union.
The PSFP Regulation: general framework for crowdfunding platforms
The PSFP Regulationwas adopted in order toharmonize the rules relating to crowdfunding platforms throughout the European Union. This framework aims to offer increased protection to investors while promoting the development of crowdfunding platforms in a regulated environment. THE Regulations apply to platforms which facilitate the granting of loans or the connection of investors with project leaders for the financing of transferable securities or financial instruments.
One of the main objectives of the Regulation is to guarantee the transparency of projects proposed to investors. Thus, crowdfunding platforms must provide detailed information on the projects financed, including the associated risks, the nature of the underlying assets and the rights of investors. This allows investors to make informed decisions before making a financial commitment.
The Regulation also provides for strict investor protection requirements. Platforms must, for example, comply with rules of good conduct and management of conflicts of interest, while guaranteeing the security of the funds collected. Additionally, they must be registered with relevant national authorities, such as the Autorité des Marchés Financiers (AMF) in France, and meet minimum capital requirements to operate.
However, the question arises whether this framework also applies to platforms that facilitate investments in cryptocurrencies. Indeed, the PSFP Regulation was designed to regulate platforms operating with fiat currencies and traditional financial instruments.
The introduction of cryptocurrencies raises questions about the application of these strict rules.
Cryptocurrencies and crowdfunding: what about the application of the PSFP Regulation?
When crowdfunding platforms integrate cryptocurrencies as a means of investment, an essential distinction must be made to determine whether the PSFP Regulation applies: on the one hand, it is appropriate to question the means of financing (cryptocurrencies) and, on the other hand, on the purpose of the investment (transferable securities).
Financing via cryptocurrencies
The PSFP Regulation, as a legal framework, is designed to regulate platforms facilitating the granting of loans or the subscription of securities in fiat currency transactions. So, when cryptocurrencies like ETH are used to finance a project, the question arises whether this can be considered a loan.
Legally, a loan, according to the PSFP Regulation, involves the provision of a sum of money with an obligation to repay. As cryptocurrencies are not considered fiat moneya financing transaction in cryptocurrencies should not fall into the category of loans regulated by the PSFP Regulation.
In these situations, it is the MiCA Regulation (governing crypto-asset markets) which could govern these operations in order to regulate platforms using cryptocurrencies, for example, if the platform were to offer crypto-currency custody services. on behalf of third parties in order to secure transactions.
The object of the investment: securities
However, the situation is different when the object of the investment is a security. For example, on the RealT platform, investors acquire Ethereum tokens representing a fraction of real estate. These tokens also give the right to a share of rental income.
Even if the transactions are carried out in cryptocurrencies, the underlying object of the investment — here, ownership rights to real estate — could be considered a security. If these tokens are legally qualified as transferable securities, then the platform facilitating these transactions would be subject to the PSFP Regulation, with obligations regarding transparency, registration with authorities, and investor protection. This could also involve the application of the MiFID II framework, which governs financial instruments.
However, if the tokens were not qualified as securities under current legislation, the platform could potentially escape the requirements of the PSFP. This is where the regulation of crypto-assets in Europe, in particular with the MiCA Regulation, could apply.
The development of crowdfunding platforms using cryptocurrencies marks a turning point in the way projects can be financed. Thanks to blockchain, these platforms offer greater transparency, reduced intermediation costs, and expanded access to investors on a global scale. However, this innovation poses significant regulatory challenges, particularly in terms of application of the PSFP regulation.
LawForCode is an alliance of lawyers, tax specialists and accountants who support Web3 entrepreneurs, co-founded by Maître Arnaud Touati, partner at Hashtag Avocats, Maître Axel Sabban, partner at Revo Avocats and Claryss Lefort Expert-Comptable and founder of Build.
