Crowdcube has become the first equity-based crowdfunding platform to be regulated by the Financial Services Authority (FSA).
The move marks an important step in the development of the crowdfunding sector, which for some years has seen widespread calls for regulation.
Since its launch two years ago, more than £5 million has been raised through Crowdcube. But many potential investors have been concerned by the lack of regulation in the crowdfunding industry, with many reportedly holding off until safety measures had been introduced.
It is now thought that more widespread control of the industry may ensue, with other platforms following suit.
Crowdcube CEO Darren Westlake said: “We’re delighted to be the first authorised crowdfunding platform that allows investors to become direct shareholders in UK businesses. Our authorisation and the additional investor protection it affords will increase satisfaction and confidence.”
Meanwhile the government’s enterprise advisor Lord Young said: “Crowdfunding is a highly innovative an important source of finance for UK businesses. I am delighted to see that the UK financial services industry and its regulators are reacting dynamically to new models of business finance, such as equity crowdfunding, so that the UK can maintain its position as world leader in this space.”