Recent Developments of Chinese Securities Crowdfunding

By Irene Tordera, According to recent forecasts, China is expected to become the largest economy in the world by the end of this year. What if securities crowdfunding is allowed there? And what if it happens even before Title III is released? 7742372 The situation for crowdfunding in China is mixed: reward crowdfunding is already working in the Chinese Republic, offering to artists and creatives the possibility to raise funds for their projects in an innovative way. Peer-to-peer lending has been up and running for a few years now. However, as Crowd Valley reported in a recent article , P2P lending is undergoing a decline in the region, as many players are getting out of the market. Two of the main reasons for the many failures, after a multiyear period of steep growth, are the liquidity squeeze enacted by the central bank at the end of last year and the heavy competition. Equity crowdfunding is instead not allowed yet, since public solicitations of investments is forbidden. However, one platform found a way around it, allowing self-declared professional investors to invest in a Special Purpose Vehicle which then buys the shares of the company seeking equity capital. Recently, it has been reported that the China Securities Regulatory Commission (CSRC) is considering to adopt a regulation for securities crowdfunding. CSRC recognized the potential of this financial innovation to facilitate access to capital to micro-businesses and SMEs and it is looking forward to “promote the sound and regulated development of the equity crowdfunding industry, protect the lawful interests of investors, prevent financial risks, and highlight the role of the financial industry in serving the real economy”. This announcement is a big step for the Chinese emerging crowdfunding industry, although no deadline or further details have been specified by CSRC. If a regulation for securities crowdfunding will be pushed through in such a huge market, allowing everyone to invest in chinese businesses, the forecasted $25 billion in 2025 for the Chinese crowdfunding market do not seem anymore just a possibility. Things are moving relatively fast for crowdfunding around the world, but if you add to this the speed with which China has changed and grown over the last decade, it might well be that the Chinese Republic will beat many countries, adopting soon regulations for securities crowdfunding. About the author – Irene Tordera

Born and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives.

During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem.


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