Comparative analysis of the European Union crowdfunding service providers regulation and regulatory barriers for crowdfunding in the Baltic States

Abstract

The issue of conflicting national frameworks on crowdfunding and dispersed structures of investors and products has drawn significant attention in the European Union. Some Member States introduced national rules to regulate their crowdfunding platforms, while others left some aspects of the activity unregulated. This variation of national licensing, diverging definitions of business models and application of existing EU legislation are considered to contribute to crowdfunding market fragmentation. Some surveys demonstrate that crowdfunding regulatory heterogeneity in the Member States negatively affects the market. In the paper, this heterogeneity is revised on the example of Latvia, Lithuania, and Estonia, since the crowdfunding market is fully regulated only in Lithuania. From this point of view, the Regulation (EU) 2020/1503 on European Crowdfunding Service Providers for Business was an ultimately expected event for the crowdfunding market. Therefore, the aim of the paper is to analyse the regulatory barriers for crowdfunding in Latvia, Lithuania, and Estonia and to compare them with those of the European Union Crowdfunding Service Providers Regulation. To achieve the aim of the paper, generally accepted methods of research have been used, including literature source study, comparative analysis and synthesis, legal act analysis. The paper results include the analysis of existing regulatory barriers for crowdfunding in the Baltic States and their comparison with the Regulation, highlighting crucial aspects and revealed differences. In addition, the comparison of current crowdfunding market performance with the actual regulatory barriers in force in the states is provided in the paper.