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Alternative Market Briefing

Crowd-funding needs regulatory oversight

Thursday, February 06, 2014

Komfie Manalo, Opalesque Asia:

The Research Department of the International Organization of Securities Commissions (IOSCO) said that crowd-funding provides a boost to economic growth by providing credit to small and medium-sized enterprises (SMEs) and other users of the real economy.

This was one of the several benefits cited by a IOSCO staff working paper ’s study entitled, Crowd-funding: An Infant Industry Growing Fast, authored by Eleanor Kirby and Shane Worner of IOSCO, and published this month.

The report defines crowd-funding as "an umbrella term describing the use of small amounts of money, obtained from a large number of individuals or organisations, to fund a project, a business or personal loan, and other needs through an online web-based platform." It can take the form of donation, reward, peer-to-peer or equity. The reports focuses on the two latter kinds, referred to as "financial return crowd-funding" or "FR crowd-funding".

The FR crowd-funding market has doubled year on year for the last five years to an estimated $6.4 billion in 2013, driven by annual growth of 90% in peer-to-peer lending. Peer-to-peer lending has spread across the globe, making FR crowd-funding a global phenomenon. The equity crowd-funding market is more modest in size and has grown at a slower pace.

Other benefits of crowd-funding are: entrepreneur ......................

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