Proposals to limit crowdfunding in Spain

The Cabinet has approved a plan to impose limits on online crowdfunding, an increasingly popular means of raising funds for various products. The proposal will introduce a 3,000-euro ceiling on individual investor contributions to any given project and a 6,000 euro limit for individuals investing in a particular funding platform.

The Ministry of Economy issued a statement saying that the proposal came as a result of consultations conducted in other countries. The Ministry said it was approving a preliminary regulatory proposal setting the conditions for the operation of this new system which is based upon electronic platforms that put investors and projects directly in touch with each other.

The goal, say the Ministry, is to encourage this new tool for direct financing of business projects in their initial stages of development, while at the same time protecting investors.

The regulations will force these crowdfunding portals to be transparent and provide investors with sufficient information to make their decisions.

Oddly, one never seems to hear about too many problems resulting from crowdfunding ventures, only those involving the more ‘normal’ channels such as banks, government grants etc.

Economy Minister Luis de Guindos justified the move by arguing that the United States and Britain are already regulating crowdfunding activities, while Brussels is also apparently considering it. The minister added that this new system, which is without banking agents, means that entrepreneurs and investors are bypassing all habitual channels.

The proposals to limit crowdfunding are included in the draft ‘Encouraging Business Financing Law’.

In other words, the middle-men are being bypassed and someone is not getting their cut.

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