Everyone pools: Elvira Nabiullina to look closer at crowdfunding
Crowdfunding platform organisers are afraid the Central Bank will ‘‘expulse’’ foreign participants from platforms
The Central Bank has seriously started fighting against crowdfunding platforms. The regulator told the gradual control of the sector won't begin earlier than 2018. But market participants are offered a test today. It is planned the Russian platforms will voluntarily start working following the Central Bank's rules. Conclusions that will be the basis of a law will be made after results of the experiment are known. Realnoe Vremya's reporter studied existing problems in the work of crowdfunding platforms of Russia and heard out forecasts of the adoption of the announced bill together with market players.
Central Bank enters crowdfunding
The Central Bank took action after numerous statements about the necessity to regulate the market of crowdfunding services in Russia. According to Kommersant, the bank regulator prepared a ''road map'' that presupposes tests of crowdfunding platforms including P2P platforms where one natural persons lend other natural persons without the participation of banks.
City of Money reciprocal lending platform became one of the participants of the experiment. Its Deputy Chairman of the Board of Directors Yulian Lazovsky told Realnoe Vremya that crowdfunding platforms will need to create a capital of at least 10 million rubles within the cooperation with the Central Bank, find benefactors with shares of more than 10% and obligatorily analyse the financial state of lenders and identify investors. Another requirement is about the placement of clients' data – they need to be stored in Russia.
''We have been meeting the majority of these requirements for a long time because we consider them reasonable for our market, we are ready for others,'' Yulian Lazovsky comments.
The experiment is to end in summer 2018. As a result, a scheduled regulation system will be implemented. In answer to the news about the creation of the ''road map'', the press service of the Central Bank told RIA Novosti that the regulator thinks it is early to impose the control of the crowdfunding market not to impede it from forming a business model. So the Central Bank won't enter this market until 2018 only in case of a larger scale of transactions or appearance of significant risks.
Without terminology and structure of the sector now
One of the biggest Russian platforms Planeta.ru is in the working group to discuss the imposition of a regulation of crowdfunding platforms' work. It has not acquainted with the ''road map'' yet. This is why they did not comment on the news. However, they said what the major problem was they are facing now. According to PR Manager of the project Irina Borisova, major difficulties arise due to the absence of a single terminology.
''That's to say, there is still no single understanding what crowdfunding is. Of course, it generates a pile of mistakes. The regulator will solve this problem too,'' the specialist comments.
Deputy Chairman of the Board of Directors of City of Money Yulian Lazovsky, in turn, says about the necessity to give crowdfunding and crowdlending the status of financial market players with its reflection in all the norms regulating the sector indirectly, that's to say, include it to the structure of the sector.
''Without it, problems arise in the most unexpected places – banks and financial monitoring require investors to prove the legality of the money received, and advertising platforms try to forbid the word ''crediting'' because, in their opinion, only banks can do it,'' Lazovsky thinks.
Kazan launched its own crowdfunding platform called Map of Initiatives just a bit less than 1,5 month ago. The project's authors told Realnoe Vremya that legal difficulties while launching crowdfunding don't arise. And any juridical person can do it without obtaining additional permissions.
''Now all the conditions come to the execution of general rules. For instance, it is necessary to execute the law on storage and processing personal data, make an agreement with organisers of projects, enumerate raised money based on targeted financing. In general, from our point of view, the current situation in the legislature doesn't need a drastic change,'' director of the platform Timur Safin comments.
Foreign capital will go but Р2Р won't change?
Now it is unknown what the final bill will look like. But today we can forecast the consequences it will lead to. The deputy chairman of the Board of Directors of City of Money forecasts that changes will affect the P2P market the least because today the majority of platforms meet the requirements of the Central Bank. The major movements linked with the arrival of the regulator will take place right on crowdfunding platforms.
''Big international platforms are likely not to meet the requirements of the Central Bank and go. Russian start-ups oriented to western markets and investments from foreign users will follow them. Russian platforms will get more opportunities. But it will be difficult for them to borrow money from same Russian investors during the stagnating economy,'' Deputy Chairman of the Board of Directors of City of Money Yulian Lazovsky presupposes.
Direct of Map of Initiatives Timur Safin doesn't exclude that the additional control system can negatively affect crowdfunding platforms, thus limiting the market growth.
''On the one hand, donors (benefactors) as well as organisers of projects (those who receive money) are not protected by law. They cooperate within contracts and agreements. However, is not it enough? If the requirement to create a capital of at least 10 million rubles appears in the law, it will be a serious obstacle for small start-ups,'' the speaker comments. ''What is more, it is unclear what will happen to charity fundraising because there are platforms based on noncommercial organisations. Strict regulation in this sphere can destroy the already slowly growing segment of non-commercial associations that look for money to realise social, cultural, educational projects.
Popularity of loans without banks and charity for foxes and films
The interest of the Central Bank in crowdfunding platforms and their types – crowdlending platforms – is linked with the growing volumes of this market. Such a tendency is observed not only in Russia but also in other countries. In 2015, the world crowdfunding market was estimated at $34,5bn. In addition, more than half of the money was in North America with a 82% growth. The growth in Europe totalled 98,7% and 210% in Asia. The analogous tendency is also observed in the Russian market. The Central Bank monitored crowdfunding platforms in Russia for the first time in 2016. As a result, the volume of the market was 2 billion rubles. According to Yulian Lazovsky, the growth pace of P2P market amounted to about 400% in 2016. They expect the same growth this year as well.
Unlike crowdfunding platforms, Tatarstan has not heard about the P2P market yet. They use them to both raise money for art and charity and start-ups. For instance, Kazan director Ilshat Rakhimbay managed to raise 325,000 rubles via Planeta.ru to shoot a film about a mullah and a priest Imagine. This year, the film has been included in the competition in Short-Length Action-Live Film in the Muslim film festival in Kazan. Earlier it was presented in Yekaterinburg in the 4th Kinohackaton 2017 Russian Film and Creative Economy Forum.
Edition of an illustrated book for kids Kyrlay Tales is another example of the Kazan initiative. Last year, 99,000 rubles of the needed 170,000 were raised. Same Map of Initiatives is a very young platform. Nevertheless, during its 2-month work, it managed to raise part of the money to hold a modern art and ethnographic festival called Tales on Kama in Naberezhnye Chelny on 20 August. By the way, the same platform launched fundraising to purchase animals for the Kazan zoo The Zambezi River, which is under construction. One can help it buy secretary birds or, for instance, small foxes called fennecs.