Government Sets Out Plans To Regulate Crowdfunding

The government on Monday set out plans to regulate crowdfunding, requiring all campaigns to apply for permission to do so.

It said some of the more popular online crowdfunding activities pose risks to public interest and safety, and a regulatory regime can prevent people from engaging in fraudulent activities or jeopardising national security in the name of crowdfunding.

The Financial Services and the Treasury Bureau said it plans to set up a Crowdfunding Affairs Office to vet applications, with new laws that would apply to those who raise funds publicly from Hong Kong people or entities online or offline, regardless of whether they're permanently set up in the SAR.

In handling applications, the office would consider factors including the would-be crowd funder's honesty, reputation and reliability, and the risks brought about by the activity to public interest and safety, as well as national security.

Whether the purpose of the fundraising is proportional to its scale would also be taken into account.

The fundraiser would need to disclose his or her objectives and arrangements of the fundraising, use a local bank account and keep proper records.

The bureau proposes that those who "illegally transfer and use unlawful crowdfunding funds" would be prosecuted.

However, it said the new regulatory regime will not apply to commercial fundraising activities in the market as these are already well regulated.

The bureau also proposes exemptions for activities widely recognised by society, as well as sudden charitable projects.

Exemptions would also apply to religious donations; buying and selling of goods readily available in the market; recognised associations seeking funds from members to promote the welfare of the trade; as well as commercial activities online involving subscription income or online rewards.

Money raised from these four exempted activities, the bureau said, cannot be used for political purposes.

The public has been given three months to submit its views on the proposals.