The new regulation that requires crowdfunding platform to have license was believed to be effective by end of 2016
Singapore-based crowdfunding platform for small businesses Funding Societies announced on Monday night that they are temporarily halting crowdfunding loan terms following regulatory update from Monetary Authority of Singapore (MAS).
Announced in early June, the regulatory update requires crowdfunding platform to apply for Capital Markets Services (CMS) licence to operate.
According to a statement by Funding Societies, “We and the industry expected minimal operational change, as ‘MAS anticipates that the relevant amendments will be tabled in Parliament in the second half of 20162,’ impacting us only in late 2016.”
However, when the startup initiated clarification meeting senior authorities and sought for legal advice from law firms, the company found out that it begins with immediate effect though regulatory amendments only apply after the Parliamentary approval.
While it remains unclear whether MAS will take disciplinary actions against the platform, Funding Societies decided to temporarily halt crowdfunding loan terms and take several mitigation steps that begin with submission of licence application.
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“‘Typically’, it takes three to four months [for the applicant to be approved], but we could be faster or slower. We’d resume crowdfunding term loan ASAP, once we get licensed!” it stated.
Apart from application submission, Funding Societies will also “restructure to avoid regulatory grey area” and enable lending via private placement.
The company also stated that it is currently exploring the development of an alternative product which is potentially permissible for crowdfunding.
It will also continue on servicing current loans and ensure repayment collections.
e27 is reaching out to MAS and Funding Societies for comments.
The post Funding Societies temporarily halts crowdfunding loan terms following regulation update appeared first on e27.
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