"Röntgen" Has Been Granted a European Crowdfunding License
The platform "Röntgen" (UAB "Trecia diena") has been granted a crowdfunding service provider license by the Bank of Lithuania under the EU Crowdfunding Regulation. The European regulation will soon introduce new features for investors, such as a "cooling-off period," and the platform itself will now have the opportunity to expand its operations more easily across different regions.
The Crowdfunding Law, which has been in effect in Lithuania since 2016, was one of the first of its kind in Europe and even globally. However, starting this November, it will be replaced by the EU Crowdfunding Regulation – a legal act that regulates crowdfunding services and their oversight across the continent. From now on, operators of crowdfunding platforms holding a European license will be able to offer their services in all EU countries, with the regulation standardizing the activity across different markets.
The early regulation of crowdfunding in Lithuania led to the EU regulation being quite similar to the Lithuanian law. Lithuania was one of the first to protect investors in crowdfunding from fraud cases or scandals involving lost investments seen in unregulated neighboring markets. So, while the entry into force of the EU regulation is a significant event across the continent, especially in previously unregulated markets, Lithuanian investors will not experience major changes, and the investment process will not significantly alter.
The most notable innovation for investors brought by the European regulation will be the "cooling-off period," i.e., the ability to withdraw from an already made investment within a certain period. A similar principle applies to returning goods or taking out consumer credit. "Röntgen" investors will be able to use this feature no later than November 10, 2023.
The European license will also lead to slightly more convenient investment contracts for investors – the old ones will remain unchanged, but new contracts will become more detailed and standardized. The investment processes under the European license are becoming more thorough: for example, operators are required to conduct more detailed suitability tests and project evaluations, which obliges licensed platforms to further improve, providing additional benefits to investors by further reducing risks.
From the platform's perspective, the European license allows "Röntgen" to actively attract investors across the EU. Although it was already possible to finance projects abroad without active foreign advertising, "Röntgen" will continue to focus on real estate projects and consumers in the well-known domestic market while expanding activities in the aviation business, which is mainly regulated by international law.
According to "Röntgen" CEO Martynas Stankevicius, the platform did not face major challenges during the licensing process, especially since the EU regulation is close to the Lithuanian Crowdfunding Law, which has been in effect for several years. He noted that the European regulation will primarily standardize the rules for participants in Lithuania and other EU countries but will not change the strategy of "Röntgen". Moreover, with the regulation being standardized, it is expected that best practices will develop in the EU, and the European Securities and Markets Authority (ESMA), together with local regulators, will be able to become official market advisors in interpreting specific requirements.
"One aspect of the new regulation that has somewhat disappointed us is that "Röntgen", as a company, will no longer be able to invest in projects listed on the platform. Previously, we as a legal entity invested in listed projects alongside the entire market, thereby demonstrating our trust in what we offered to investors. We believe that the prohibition of this practice is excessive, but we will continue it as individuals – employees and shareholders," says M. Stankevicius.
The licensing process under the EU regulation was assisted by the law firm "Response Legal". Its attorney and managing partner Vytautas Senavicius says that "Röntgen" will continue to be directly supervised by the Bank of Lithuania – one of the most experienced supervisory institutions in the EU's crowdfunding sector.
He points out that "Röntgen", like many other Lithuanian platforms seeking a license, chose a broader scope of crowdfunding services than participants in other EU countries. The main reason is the intention to offer a wider range of services and create more innovative investment mechanisms for investors.
"For example, in the future, the "Röntgen" platform plans to offer automatic investment services, apply credit rating scores to crowdfunding projects, provide pricing for crowdfunding projects, and/or set interest rates. While this is not new in Lithuania, platforms in other EU countries chose a simpler and quicker way to obtain a license, but in doing so, they limited themselves from offering these services," says V. Senavicius.
According to him, "Röntgen" not only lists investment real estate development projects but also actively operates in the bond market. Therefore, the European licensing process for "Röntgen" took a bit longer, as the platform had to prepare additional documents and descriptions to answer specific questions from the Bank of Lithuania. However, the platform proved that it is ready to offer debt securities crowdfunding under EU rules.
"Since the "Röntgen" team has experience in the bond market, all questions were quickly answered," says V. Senavicius.
During the first half of 2023, professional and retail investors on the "Röntgen" platform raised a total of 23 million euros for real estate projects, or 118% more than in the same period last year. The platform currently has a community of over 16,000 investors. "Röntgen" has been actively operating since 2017, during which time the platform's investors have raised more than 76 million euros in total.
"Röntgen" Has Been Granted a European Crowdfunding License
The platform "Röntgen" (UAB "Trecia diena") has been granted a crowdfunding service provider license by the Bank of Lithuania under the EU Crowdfunding Regulation. The European regulation will soon introduce new features for investors, such as a "cooling-off period," and the platform itself will now have the opportunity to expand its operations more easily across different regions.
The Crowdfunding Law, which has been in effect in Lithuania since 2016, was one of the first of its kind in Europe and even globally. However, starting this November, it will be replaced by the EU Crowdfunding Regulation – a legal act that regulates crowdfunding services and their oversight across the continent. From now on, operators of crowdfunding platforms holding a European license will be able to offer their services in all EU countries, with the regulation standardizing the activity across different markets.
The early regulation of crowdfunding in Lithuania led to the EU regulation being quite similar to the Lithuanian law. Lithuania was one of the first to protect investors in crowdfunding from fraud cases or scandals involving lost investments seen in unregulated neighboring markets. So, while the entry into force of the EU regulation is a significant event across the continent, especially in previously unregulated markets, Lithuanian investors will not experience major changes, and the investment process will not significantly alter.
The most notable innovation for investors brought by the European regulation will be the "cooling-off period," i.e., the ability to withdraw from an already made investment within a certain period. A similar principle applies to returning goods or taking out consumer credit. "Röntgen" investors will be able to use this feature no later than November 10, 2023.
The European license will also lead to slightly more convenient investment contracts for investors – the old ones will remain unchanged, but new contracts will become more detailed and standardized. The investment processes under the European license are becoming more thorough: for example, operators are required to conduct more detailed suitability tests and project evaluations, which obliges licensed platforms to further improve, providing additional benefits to investors by further reducing risks.
From the platform's perspective, the European license allows "Röntgen" to actively attract investors across the EU. Although it was already possible to finance projects abroad without active foreign advertising, "Röntgen" will continue to focus on real estate projects and consumers in the well-known domestic market while expanding activities in the aviation business, which is mainly regulated by international law.
According to "Röntgen" CEO Martynas Stankevicius, the platform did not face major challenges during the licensing process, especially since the EU regulation is close to the Lithuanian Crowdfunding Law, which has been in effect for several years. He noted that the European regulation will primarily standardize the rules for participants in Lithuania and other EU countries but will not change the strategy of "Röntgen". Moreover, with the regulation being standardized, it is expected that best practices will develop in the EU, and the European Securities and Markets Authority (ESMA), together with local regulators, will be able to become official market advisors in interpreting specific requirements.
"One aspect of the new regulation that has somewhat disappointed us is that "Röntgen", as a company, will no longer be able to invest in projects listed on the platform. Previously, we as a legal entity invested in listed projects alongside the entire market, thereby demonstrating our trust in what we offered to investors. We believe that the prohibition of this practice is excessive, but we will continue it as individuals – employees and shareholders," says M. Stankevicius.
The licensing process under the EU regulation was assisted by the law firm "Response Legal". Its attorney and managing partner Vytautas Senavicius says that "Röntgen" will continue to be directly supervised by the Bank of Lithuania – one of the most experienced supervisory institutions in the EU's crowdfunding sector.
He points out that "Röntgen", like many other Lithuanian platforms seeking a license, chose a broader scope of crowdfunding services than participants in other EU countries. The main reason is the intention to offer a wider range of services and create more innovative investment mechanisms for investors.
"For example, in the future, the "Röntgen" platform plans to offer automatic investment services, apply credit rating scores to crowdfunding projects, provide pricing for crowdfunding projects, and/or set interest rates. While this is not new in Lithuania, platforms in other EU countries chose a simpler and quicker way to obtain a license, but in doing so, they limited themselves from offering these services," says V. Senavicius.
According to him, "Röntgen" not only lists investment real estate development projects but also actively operates in the bond market. Therefore, the European licensing process for "Röntgen" took a bit longer, as the platform had to prepare additional documents and descriptions to answer specific questions from the Bank of Lithuania. However, the platform proved that it is ready to offer debt securities crowdfunding under EU rules.
"Since the "Röntgen" team has experience in the bond market, all questions were quickly answered," says V. Senavicius.
During the first half of 2023, professional and retail investors on the "Röntgen" platform raised a total of 23 million euros for real estate projects, or 118% more than in the same period last year. The platform currently has a community of over 16,000 investors. "Röntgen" has been actively operating since 2017, during which time the platform's investors have raised more than 76 million euros in total.
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"Trečia diena" UAB, which operates the Röntgen platform, is a licensed crowdfunding platform. The platform is governed by the EU Crowdfunding Regulation and is supervised by the Bank of Lithuania in accordance with the law.