By Crowdfund Vibe Staff Writers
Crowdfunding can stimulate economic recovery by channelling capital to small and medium-sized enterprises (SMEs) according to a report issued by the Research Department of the International Organization of Securities Commissions (IOSCO).
Their report identifies benefits and risks, particularly in the area of investor protection. It advises that governments around the world will have to harmonise their regulatory approaches to an increasingly global industry. In doing that governments and regulators will need to strike a balance between encouraging crowdfunding and mitigating the risks associated with its growth.
The report reviews both peer-to-peer lending (crowd-lending) and equity crowdfunding (crowdinvesting), and provides key insights on the main implications for users. This is the first publication of its kind that ties together a global overview of the industry together with a comprehensive profile of its regulatory landscape in 13 IOSCO member-countries. (This includes the Pacific Rim countries of Australia, Japan, New Zealand, South Korea, Ecuador, Canada & the USA.)
While crowdfunding markets are small, they are growing fast. Driven by annual growth of 90% in peer-to-peer lending, the global crowdfunding market has doubled year on year for the last five years to a estimated $6.4 billion in 2013, according to IOSCO. The worldwide equity crowdfunding market is more modest in size and has grown at a slower pace. While the current market size is too small to cause systemic risk, IOSCO consider it has the potential to grow to a sizeable market in a short period of time.