02 Feb 2017, 3:23 pm
The proposals include setting minimum standards and establishing checks on both borrowers and lenders.
Crowdfunding schemes should be transparent in their operations and give adequate information to all participants, and have appropriate safeguards to protect their clients' money, the DFSA said.
Proposals also cover the development of business cessation plans, and allow the transfer of the rights and obligations under a loan agreement between lenders, it said.
"The DFSA has been monitoring developments in financial technology (fintech) both internationally and regionally since 2015, and has been engaged in discussions with firms looking to establish a presence in the DIFC. In some cases, these firms have been considering activities that would be regulated, such as loan-based crowdfunding," the DFSA said.
Ian Johnston, chief executive of the authority said: "Crowdfunding offers an additional avenue for the SME sector to access financing. Establishing a clearly defined regulatory framework, that takes into account the specific needs of loan-based crowdfunding operators, supports the sustainable development of this important funding source for SMEs."
The consultation will run until 2 March.
