Analysis Of Crowdfunding Risks And The Regulation

Internet approached people since the mid-90’s which Initial a substitute for the newspaper becomes omnipotent. Increasingly popular online payment, e-shopping has been unable to meet the people’s constant pursuit of new things. So an online service is born at the right moment, especially for those projects which need money and those people who have extra fund to invest, we call this service as crowdfunding.With the impact of the financial crisis in 2008, many financial institutions declared bankrupt; Governments tighten financial supervision. The real economy has been hit, especially the start-ups and small businesses. Crowdfunding as a savior of the disaster who provides funding for start-ups and it has been explosive growth in recent years. This article can be regarded as a summary of its experience and lessons.Definition and taking analysis of the form of Crowdfunding was in part one. First of all, the author divides it into two types, non-equity and equity. And according to its part of the rights and obligations, further categories it down into small classes, then discusses for each piece. The most usual form is reward-based of none-equity crowdfunding, the most questioned form is debt-based of none-equity crowdfunding, and the most controversial form is equity crowdfunding.The second part focuses on risks. The author, in the process of analysis, according to the status of each stakeholder and the risks they face, and inserting some classic case cooperating discussion. The purpose is to help all the participants to identify and guard against risks better, raise and provide references for government regulation and academic research.After the discussion of risks, the third part focuses on crowdfunding regulation. The author discusses the current regulation of the European Union and the United States. Then the writer explains the regulation in China, and some existing problems are analyzed. Regulation is mainly aimed at the equity and debt-based, specific measures are taken as follows, requiring the crowdfunding platforms to register, setting threshold for the project, requirements fundraisers full disclosure of information, and sets up barriers to entry for investors etc.The final part summarizes all of the paper, and for the supervision of the existing problems, the author puts forward some countermeasures to government.