What is crowdfunding?

Participatory financing, or crowdfunding, is an exchange of funds between individuals outside institutional financial circuits, in order to finance a project via an online platform.

Participatory financing, or crowdfunding, refers to an exchange of funds between individuals outside of institutional financial circuits. It differs from the participatory loan (les-aides.fr), reserved for financial institutions.

The call for funds is made from the description of a specific project (artistic, humanitarian, entrepreneurial, etc.), using an online platform to collect numerous contributions of small amounts. Funding can take the form of a donation, a loan with or without interest, or a capital investment.

The legal framework adapted to crowdfunding.

In order to remove the obstacles to the development of this method of financing, Ordinance No. 2014-559 of May 30, 2014 relating to crowdfunding defined a new regulatory framework allowing legal security of transactions and protection of investors.

The order thus creates the status of crowdfunding intermediary for lending sites and the status of crowdfunding advisor for equity investment sites. It is implemented by Decree No. 2014-1053 of September 16, 2014, which sets the ceilings applicable to loans and borrowings, and details the professional capacities required for the exercise of the activity of intermediary.

The Directorate General of the Treasury offers a sheet on the legal framework for crowdfunding; the mechanism is presented by a report to the President of the Republic published in the Official Journal of May 31, 2014.

In addition, decree no. 2016-1272 of September 29, 2016 establishes a specific participatory finance regime for renewable energy production projects.

Finally, the law of October 8, 2021 containing various provisions for adaptation to European Union law in the field of transport, the environment, the economy and finance, allows, from January 1, 2022, local authorities who wish to finance their crowdfunding projects with bonds. This is a three-year experiment.

Crowdfunding: a new European framework.

In October 2020, the European Parliament approved new rules allowing crowdfunding platforms to provide services across the single market of the European Union (EU). The current systems of advisors or crowdfunding intermediaries must disappear in favor of a new single status.

Decree No. 2022-110 of February 1, 2022 changes the framework applicable to crowdfunding, in order to comply with Regulation (EU) 2020/1503 and Directive (EU) 2020/1504. These texts lead to the creation of a single European statute for crowdfunding service providers.

See also: European Crowdfunding Regulation, amf-france.org

Minibons and the blockchain

Ordinance No. 2016-520 of April 28, 2016 and Decree No. 2016-1453 of October 28, 2016 modify the legal regime of cash vouchers with, in particular, the creation of a new category of cash vouchers, minibons, usable on crowdfunding platforms.

Thus, since October 1, 2016, minibons can be subscribed by individuals, companies and certain institutional players. The issues may reach an amount set by decree at 2.5 million euros over 12 months, as indicated by the Council of Ministers on April 27, 2016.

The implementation of minibons should allow experimentation with protocols using blockchain technology, which allows non-centralized secure exchanges. The use of this technology is made possible by decree no. 2018-1226 of December 24, 2018.

Crowdfunding control.

The Financial Markets Authority (AMF) and the Prudential Supervisory and Resolution Authority (ACPR) share control missions over operators. Depending on the type of financing they offer, operators are subject to different obligations.

• Financing by means of financial securities: registration in the Orias register as a crowdfunding investment adviser (CIP)
• Financing by means of interest-free or interest-free loans: registration in the Orias register as a crowdfunding intermediary (IFP)
• Funding in the form of donations: no obligation to register

Crowdfunding platforms are registered in the single register of insurance, banking and finance intermediaries (Orias). The advanced search on the register makes it possible to identify the advisers in crowdfunding investments and the intermediaries in crowdfunding registered.