Working closely with regulator the Financial Services Authority (FSA), the island’s department for economic development said the new regulatory framework has been designed to attract startups specialising in investment and debt crowdfunding.
“The Isle of Man is the first international business centre to introduce this type of legislation and we believe it will support the creation and growth of new businesses on the Isle of Man.” said John Garland, head of corporate financial services for the Isle of Man’s government.
Existing platform firms and those looking to set up business on the crown dependency will now be required to apply for a Class 6 Crowdfunding License from the FSA.
“We have been working very closely with the Isle of Man FSA and local industry to develop a robust and business friendly licence that can support new and exciting business on the Isle of Man,” Garland said.
Crowdfunding in financial services
Debt crowdfunding, also known as peer-to-peer (P2P) lending, allows investors to bypass traditional banks and put their money into projects that usually pay their money back with interest.
Popular platforms include LendInvest, which specifically invests in residential and commercial mortgages and Funding Circle, aimed at providing loans to small businesses.
Meanwhile, Dutch platform Symbid, one of dozens of equity crowdfunding platforms sees people invest in opportunities in return for shares, or a small stake in the business, project or venture where if successful the value will go up.
