Government to impose limits on crowdfunding

Economy Ministry says it is following lead of the United States and Britain in regulating platform

The Cabinet on Friday approved a plan to impose limits on online crowdfunding. The proposal will introduce a 3,000-euro ceiling on individual investor contributions to any given project, and raises that amount to 6,000 euros for individuals investing in a particular funding platform.

The Economy Ministry issued a statement saying that "in line with consultations conducted in other countries around us [...] we are approving a preliminary regulatory proposal setting the conditions for the operation of this new system, based on electronic platforms that put investors and projects directly in touch with each other."

The goal, said the statement, is "to encourage a new tool for direct financing of business projects in their initial stages of development, while protecting investors."

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

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

These limits to crowdfunding are included in the draft Encouraging Business Financing Law, whose stated goal is to "make funding more accessible for small and medium businesses."