Even today, laws continue to regulate crowdfunding. This happens because certain countries haven’t decided how to address this new economic initiative. Or because they’ve made changes to improve the performance of these laws. Either way, it’s worth reviewing them and seeing how they’ll impact crowdfunding in 2018.

The laws that regulate crowdfunding in 2018 and their impact

The way in which crowdfunding is regulated varies from country to country. Some apply more stringent measures while others are more lenient. But the truth is that these measures never cease to take palce. Every year we see how crowdfunding receives more regulation and control by governments. Although, is this good or bad? It’s worth finding out.

Crowdfunding has always been regulated because responsibility is involved. When a campaign creator offers perks in exchange for money, it’s assumed that they’ll deliver them. When these rewards are given, there are no problems, but when this isn’t the case things become uncomfortable. This is one of the reasons why crowdfunding is usually regulated. In addition to other reasons such as taxes.

The panorama worldwide

Let’s talk about the laws in force first. According to CGO, in the United States the JOBS act received legislation to be less strict and continue to benefit small businesses. Now it allows the participation of non-accredited investors and entrepreneurs without breaching the law. With regard to the United Kingdom, crowdfunding is still under the scrutiny of the Financial Conduct Authority (FCA). Although specifically equity crowdfunding and P2P lending.

The latter is because the FCA wants these models to be transparent and reliable. On the other hand, we have the Fintech Law in Mexico. Where a case similar to that of the United Kingdom occurs, since this law also seeks to safeguard investors. Demanding platforms that use crowdfunding to be transparent about the projects they have. It’s expected that the law will continue to benefit those interested in this business.

worldwide crowdfunding regulation
Equity crowdfunding is highly regulated worldwide, mainly because it’s intended to avoid the frauds and risks that it may entail. Source: Noobpreneur.com

We also have Australia, where crowdfunding receives a different treatment. The Parliament of Australia is the entity that grants authorization to own platforms based on equity crowdfunding. And this year it began to grant licenses authorizing certain platforms to operate according to SmartCompany. Experts expect more Australian startups to join equity crowdfunding in 2018 and 2019 thanks to this.

Finally, we have other cases in the rest of the world. In India there are still no laws regulating crowdfunding, it’s legal but it’s being monitored by the Securities and Exchange Board of India (SEBI). The Securities and Exchange Commission in the Philippines is applying regulations similar to those of some of the aforementioned countries. Other countries in the world still don’t have regulatory laws or are still working on their legislation.

regulation of crowdfunding worldwide
Most countries in the world still don’t have laws that regulate crowdfunding. But they understand its benefits for small businesses and investors, so they keep it legal while developing new laws. Source: thestartupgarage.com

Crowdfunding based on rewards is always the least regulated. The greatest concern lies with those who wish to participate in projects related to equity crowdfunding. The financing model that suffers the most regulation worldwide. However, most of these laws seek to protect investors and ensure transparency. Although one could speak of strict restrictions, the outlook remains stable.

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What do you think of these laws that regulate crowdfunding?