In the light of these market failures, crowdfunding has evolved into an established form of crowdsourcing and of alternative finance. The crowdfunding model normally involves the project owners that propose the project to be funded, investors that support the proposed project through funding and a moderating platform that brings the parties together to finance and launch the project in question. Crowdfunding platforms are increasingly used as a tool to finance various activities for small and nascent firms.

As a response, some Member States have already introduced domestic bespoke regimes on crowdfunding. However, Member States tailor their regulatory frameworks to the characteristics and needs of local markets and investors, which results in differences of how the rules are designed and implemented with respect to the conditions of operation of crowdfunding platforms, scope of permitted activities and licencing requirements. As a result of the different regulatory approaches, platform business models are not easily passportable across the Union. Given the uncertainty and high compliance costs for platforms in a cross-border setting that arise due to the lack of an appropriate EU framework for crowdfunding activity, crowdfunding services providers are facing difficulties in scaling their operations and cross-border flows remain limited.

The European Parliament and the Council adopted Regulation (EU) .../... on European crowdfunding service providers 1 with a view, among others, to set out proportionate requirements to the provision of crowdfunding services and to facilitate their provision on a cross-border basis, while managing operational risks and ensuring a high degree of transparency and investor protection. Regulation (EU) .../... [Regulation on European crowdfunding service providers] provides for uniform, proportionate and directly applicable requirements for authorisation and supervision together with a single point of supervision.

In addition, given the need to ensure a clear separation of services in order to manage conflicts of interest and to ensure effective supervision, a person authorised as a crowdfunding service provider under Regulation (EU) .../... [Regulation on European crowdfunding service providers] should not be authorised under Directive 2014/65/EU, and vice versa.

In the interest of legal certainty and in order to avoid the application of requirements stemming from Directive 2014/65/EU to the provision of crowdfunding services, it is necessary to explicitly specify that Directive 2014/65/EU does not apply to persons authorised as crowdfunding service providers as defined in Regulation (EU) .../... ,

To this end, this proposal exempts crowdfunding service providers from the obligations under Directive 2014/65/EU on the markets in financial instruments.