PSFP: Everything You Need to Know About the New European Crowdfunding Regulation

PSFP Crowdfunding is the new European regulatory framework applicable to crowdfunding platforms. Established by Regulation (EU) 2020/1503, this framework replaces the former French CIP and IFP authorizations. Its goal is to better protect investors and facilitate the development of crowdfunding across Europe. 

In a nutshell:

• The PSFP status establishes a single European accreditation for crowdfunding platforms;
• The fundraising cap per project is now set at 5 million euros over 12 months;
• Investors benefit from new protections: a knowledge test, a cooling-off period, and standardized information;
• The Key Investment Information Sheet (FICI) improves the transparency of proposed projects;
• Approved platforms can offer their services in several European countries thanks to the European passport.

PSFP Crowdfunding: What Is the New European Legal Framework?

The status of Crowdfunding Service Provider (CSP) is now the standard regulatory framework for crowdfunding platforms operating in Europe. Established by Regulation (EU) 2020/1503, this framework aims toharmonize the rules governing crowdfunding throughout the European Union.

This regulation, which took effect on November 10, 2021, establishes a single European status that allows authorized platforms to offer their services in multiple Member States through a European passport system.

The PSFP primarily covers:

• investments in bonds;
• investments in stocks;
• interest-bearing participatory loans.

In France, authorization is granted by the AMF (Autorité des marchés financiers), with support from the ACPR (Autorité de contrôle prudentiel et de résolution) for certain lending-related activities.

Why does the PSFP status replace the former CIP and IFP accreditations for crowdfunding?

Before the introduction of the PSFP status, crowdfunding in France consisted of two distinct systems:

• the status of Participatory Investment Advisor (CIP) for platforms offering financial securities;
• Crowdfunding Intermediary (IFP) status for platforms specializing in peer-to-peer lending.

While this national framework enabled the French crowdfunding market to take shape quickly, it had several limitations. Each European country had its own rules. This complicated the international expansion of platforms and led to differences in protection across jurisdictions.

The EU PSFP Regulation specifically addresses this issue. Its objective is therefore twofold:

• create a European crowdfunding market;
• strengthen investor protection through harmonized rules.

The PSFP for crowdfunding is therefore gradually replacing the former French regulations in order to establish a single, clearer, and more consistent framework for all European stakeholders.

What are the new rules for PSFP crowdfunding?

The new regulatory framework introduces several requirements designed to improve platform transparency and investor protection.

Fundraising threshold raised to 5 million euros

The maximum amount that can be raised through a crowdfunding platform is one of the major changes to the system. The European regulation now sets a cap of 5 million euros per project over a 12-month period.

This threshold allows companies with projects to access significant financing while operating within a regulatory framework that is simpler than that of traditional financial markets.

For crowdfunding platforms, this development also paves the way for larger-scale campaigns and a wider variety of projects offered to investors.

New Transparency Requirements

PSFP status imposes stricter organizational and informational requirements on platforms. In particular, operators must:

• provide clear and non-misleading information;
• describe the risks associated with investments;
• address conflicts of interest;
• establish procedures for handling complaints;
• Develop business continuity plans in the event of a platform failure.

The regulation also requires stricter oversight of advertising communications to prevent misleading promises of returns or an inadequate disclosure of risks.

The Key Investment Information Document (KIID)

Another major change in the PSFP regarding crowdfunding is the creation of the Key Investment Information Sheet (FICI).

This is a standardized document that must be provided to the investor before any investment is made. It summarizes the main characteristics of the project being financed:

• nature of the investment;
• risks involved;
• any applicable fees;
• investment horizon;
• terms of repayment or withdrawal.

How does PSFP status provide greater protection for crowdfunding investors?

The European regulation places investor protection at the heart of the PSFP framework. Several mechanisms are thus in place to better regulate investments by individual investors.

The Knowledge and Loss Simulation Test

Platforms must now require certain investors to take a knowledge test toassess their understanding of the risks associated with crowdfunding.

This questionnaire focuses in particular on:

• how crowdfunding works;
• the risk of capital loss;
• a lack of liquidity;
• diversification.

Inexperienced investors should also assess their ability to withstand potential financial losses. The goal is not to prevent them from investing, but to improve their understanding of the risks and raise their awareness of them.

A cooling-off period for inexperienced investors

The regulation also provides for a 4-calendar-day pre-contractual cooling-off period for inexperienced investors. During this period, the investor may change their mind without penalty or having to provide a reason. This measure is intended to limit hasty decisions and encourage a more thorough analysis of projects.

Better information about the risks

The PSFP for crowdfunding requires a much more explicit disclosure of the risks associated with crowdfunding. In particular, platforms must state that the capital invested may be lost in its entirety and that the investments are generally illiquid. They must also specify that past performance is not indicative of future results and that the investments are not covered by the guarantees applicable to bank deposits.

PSFP Crowdfunding: What Are the Benefits for Investors and Platforms?

The new regulatory framework offers several benefits to both investors and crowdfunding platforms.

For Investors

Above all, the PSFP status improves the transparency of the European crowdfunding market.

Thanks to the harmonization of rules, investors have access to more standardized information. In addition, levels of protection are becoming more consistent across the European Union, and risks are better defined and explained.

The European passport also provides access to a wider range ofinvestment opportunities across Europe.

For platforms

For operators, the PSFP crowdfunding platform greatly facilitates international expansion. An accredited platform can now offer its services in several European countries without having to obtain multiple national authorizations.

The new regulations also help strengthen the credibility of platforms by imposing stricter regulatory requirements regarding governance, transparency, business continuity, and investor protection.

How can you verify that a platform has PSFP certification?

Before investing, it is indeed a good idea to verify that a crowdfunding platform does indeed hold PSFP authorization. This verification can be done through the AMF’s official registry or the European registry maintained by the European Securities and Markets Authority (ESMA).

There are several points you should keep in mind:

• the presence of required disclosures;
• access to the FICI;
• information regarding risks;
• the clarity of commercial communications;
• complaint procedures.