Studies On Legal Regulations Of Equity-based Crowdfunding Platform In China

“Internet +” plays an important role in the promotion of innovation and transformation of China’s financial industry, and also challenges the financial regulations. Being one of the Internet Financial pattern, Equity-based Crowdfunding has outstanding characteristics of Inclusive Finance, as it opens the equity financing door for the common public. But the current law restricts the development of Equity-based Crowdfunding,it is easy to violate the crime of illegal fund-raising. Now platforms have designed several operating mechanisms to avoid legal risks,such as “leader + backer”, the limited partnership, “online+ offline”, the limitation of total number of investors, standard of investor qualifications and investment amount. However, these mechanisms are still facing many legal dilemma: the legal status of the platform is unknown, the rights and obligations of main part is uncertain, the huge financial risk, the lack of effective mechanisms to prevent fraud and breach of contract, so it is too difficult to protect investors.Focusing on the platforms, the basic principle of legislative practice of most countries is trying to achieve the balance between efficiency and security. Therefore, to overcome such legal dilemma,we should carry out the local “Legal Exemptions of Equity-based Crowdfunding”. To start with,we can establish the principle of legal regulation like combining the hard law and soft law,keeping the balance of financial innovation and financial stability, as well as taking into account the protection of investors and helping innovative small and micro enterprises to raise fund.Besides, by expanding the definition of “security”, our government should set up the Equity-based Crowdfunding pilot project, so the Securities Act will apply to regulate Equity-based Crowdfunding. What’s more, with the concept of “Easing entry barriers + strict management”, Equity-based Crowdfunding platform can be treat as a new legal entity,which will contribute a lot to the multi-layer capital market. At last, appropriate supervision and self-discipline both can standardize the behavior of platforms, guiding the healthy development of the Equity-based Crowdfunding industry.