Canada    FinTech Guide    Chapter 5    Germany


5. Crowdfunding / Crowdinvesting / Crowdlending
Germany  Germany

All forms of crowdfunding are getting more and more popluar in Germany. An obstacle is the tight regulation in this area.



Legal Affairs


In Germany only crowdinvesting and crowdlending platforms are subject to an authorization requirement. Additionally anti money laundering and data protection regulation are also to be complied with.

The license needed depends on the exact business model.

The costs of a license for a banking or financial service range from EUR 2,000.00 to 20,000.00 depending on the specific business model.

Among other things, the resources needed for business operations, in particular sufficient initial capital consisting of Common Equity Tier 1 capital, are required to be available in Germany. In the case of investment or contract broking or portfolio management, where the service providers, in providing financial services, are not authorized to obtain ownership or possession of funds or securities of customers and who do not trade in financial instruments for their own account: an amount equivalent to at least EUR 50,000.00.

Crowdfunding and crowdlending platforms which conduct banking or financial services in the form of deposit business, portolio management or contract broking have to fulfill the funds requirements according to Art. 92 and following of Regulation (EU) 575/2013 (CRR). These are: a Common Equity Tier 1 capital ratio of 4.5%, a Tier 1 capital ratio of 6% and a total capital ratio of 8%. When calculating the capital ratios, the fixed overheads of the respective asset manager play an important role.

Payment service institutions or e-money institutions have to have financial reserves depending on their structure under company law.



Economic Conditions


The crowdfunding market has a volume of about 37 million Euros in 2019. The German crowdinvesting market had a volume of about 297 million Euros in 2018. The German crowdlending market had a volume of about 210 million Euros in 2016.



Miscellaneous


In order to provide crowdfunding services, where a banking license is required, in a cost effective way in which also all legal requirements are complied with a cooperation with a fronting bank is recommended.



Contributing Authors

Schalast Rechtsanwälte mbB

Andreas Walter
Frankfurt, Germany

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Chapter Index:


1. Payment Services / Mobile Payment

2. Asset and Portfolio Management

3. Consulting and Broking Services / Robo-advisory / Auto-trading

4. Trading Platforms / Social Trading Platforms / Signal Following

5. Crowdfunding / Crowdinvesting / Crowdlending

6. Virtual Currency - Bitcoin

7. Loan Services / Factoring / Loan Broking / Finetrading

8. Online Banking Services

9. Analytics and Research / Data Management / Risk Management

10. Accounting

11. Identification

12. Online-pawning

13. InsurTech

14. RegTech

15. Initial Coin Offerings (ICOs)

Disclaimer:
The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: 1 August 2019