“Denigrate, imitate, eliminate are the three steps that incumbents typically take to see off challengers using an unconventional business model. But there is a fourth – regulate.

“Upstarts often view regulation as synonymous with step three: an attempt by vested interests to block or destroy new competition by other means.

“The latest radicals to find a barking watchdog standing in the path of revolution are the equity crowdfunders and peer-to-peer lenders. The US Securities and Exchange Commission is considering rules for companies that raise money – often in increments of as little as $1,000 – from small investors online. Its British equivalent, the Financial Conduct Authority, has just decided to limit the ability of ordinary investors to plough more than 10 per cent of their net investible assets into crowdfunded opportunities. (Neither authority claims any oversight of the other form of crowdfunding, where donations or subscription-style payments are solicited towards production of a new gadget, book or play: they are interested only in regulating offers of shares or debt.)

“The Crowdfunding Centre – a portal that promotes projects seeking funding – duly condemned the FCA for “taking the crowd out of . . .  crowdfunding”. But others in the movement are embracing the prospect of regulation. Who is right?”

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Read full Financial Times article here.