Update On ECSRC/CDB Crowdfunding Project – July 2023
Basseterre, July 13th, 2023
The following are updates on the main components of the ECSRC/CDB Crowdfunding project. The project commenced in June 2022 and implemented over a 12-month period, which ended on 30 June 2023.
Component 1: Validation of Draft Crowdfunding Policy Framework developed by the ECSRC
- After a period of public consultation on the Rules, the Commission reviewed and approved the Securities (Crowdfunding) Rules 2023 on 24 March 2023. These Rules provide the general framework that would govern equity crowdfunding activities in the Eastern Caribbean Securities Market. In equity-based crowdfunding, investors receive equity interest or purchase other types of securities offered by a company that is soliciting capital to fund its operations. Usually, these companies are small businesses or start-ups at the early stage of funding. These businesses advertise through a crowdfunding platform website, which also serves as an intermediary between investors and the company.
Component 2: Sensitization of Crowdfunding Stakeholders
- Over the period from September 2022 to January 2023, the ECSRC facilitated a number of public consultations, social media engagements and training sessions on crowdfunding and equity crowdfunding. These sessions were held mainly to raise public awareness and inform and train persons in the area of crowdfunding and specifically, equity crowdfunding and were held as follows.
- Three two-hour consultations were held via zoom from 27 September to 29 September 2022, to receive feedback on the draft Rules for equity crowdfunding developed by the ECSRC.
- Specific awareness-raising sessions for private sector organizations were held via zoom in February 2023, with Chambers of Commerce and private sector organizations in several OECS countries: Antigua and Barbuda, St. Kitts & Nevis and St. Vincent & the Grenadines. A total of 122 people participated in these sessions.
- A six-module course delivered between December 2022 and February 2023.
Component 3: Testing Crowdfunding platforms through the ECSRC Regulatory Sandbox
- Financial innovation is necessary to achieve higher financial inclusion but those innovations usually mean that the sophisticated new forms of financial products or services do not fit in neatly with the current regulatory framework. The importance of innovation for financial inclusion is well established as is investor and consumer trust and confidence. In that regard, the ECSRC believes that regulatory sandboxes can facilitate the advancement of the Eastern Caribbean Currency Union (ECCU) and the Eastern Caribbean Securities Market (ECSM).
- On 24 March 2023, the ECSRC approved Regulatory Sandbox Rules to outline the objectives and standards for the operation of the Regulatory Sandbox in the ECSM. The Rules once effected will strengthen and enhance our securities market and enable FinTech and other innovations to develop.
- The Regulatory Sandbox officially opened in March 2023, for applications from prospective equity crowdfunding platforms/intermediaries for the first cohort. At the close of the application period, the Commission had received and reviewed four applications from prospective crowdfunding intermediaries to operate in the regulatory sandbox. At the close of the application and review process, the Commission, on 30 June 2023, selected two companies to commence the testing phase. The testing will continue over a 12-month period.