Crowdfunding Regulations Explained: What Every Founder Must Know in 2025

Crowdfunding has matured. What began as a simple way to collect donations for creative ideas has become a regulated investment industry in most regions, especially when it comes to equity and debt crowdfunding.

Donation-based fundraising still sits largely outside financial regulation, but the moment investors receive shares, interest, or repayment obligations, the rules change. 

Platforms today operate under laws that govern payments, identity verification, investor protection, fundraising limits, reporting requirements, and data security. These rules vary by region, and founders and platform owners who ignore them risk fines, cancelled offerings, or being shut out of markets entirely. 

The good news is that you don’t have to navigate everything alone. Crowdfunding platforms and software providers now integrate regulated payment systems and automated Know-Your-Client checks, making it much easier for founders to launch investment rounds within the rules.

This guide breaks down the regulatory essentials that matter most in 2025, from compliance and KYC to investor limits across the U.S., UK, Europe, Saudi Arabia, and UAE. 

Сrowdfunding models: regulated or unregulated?

Donation and rewards-based crowdfunding models are generally not regulated, while investment-based crowdfunding such as debt and equity have to follow strict rules.

So, once investment activity is involved (when investors expect monetary gain), financial authorities step in. 

Regulations typically cover:

• Investor verification (suitability, AML checks)
• Platform reporting and disclosures
• Fundraising limits per issuer
• Investment caps per investor class
• Custody of investor funds
• Data handling and privacy laws
• Cross-border funding restrictions

Crowdfunding limits around the world

Every jurisdiction sets investment caps to protect retail investors. These limits also apply if founders want to raise more: regulation dictates maximum funding per investor or per issuer.

Data regulations for crowdfunding platforms

Investor data handling is now one of the most regulated components of the industry. Even if payments are outsourced, platform operations still fall under data privacy law.

Europe

For crowdfunding platforms operating under the European Crowdfunding Service Providers Regulation (ECSPR), data protection obligations usually fall under the General Data Protection Regulation (GDPR). That means:

• Platforms must be transparent about what personal data they collect, why, how long they store it, and how it will be used.
• Backers / investors have the right to access their data, request corrections, ask to be forgotten (erased), and object to certain processing or marketing uses.
• If the platforms rely on third-party services (payment processors, identity verifiers, analytics), they must ensure that these third parties also comply with GDPR (e.g., via Data Processing Agreements) and ensure cross-border data transfers use appropriate safeguards (if relevant).
• Although the GDPR itself does not mandate strict data localization, many European-based platforms choose data centers within the EU or use compliant cloud services to minimize risk and simplify compliance.

Therefore, if you, as a founder, target European investors, ensure the platform you choose is GDPR compliant, has a clear privacy policy, and uses trustworthy data processors.

United Kingdom

The UK, now outside the EU, continues to maintain data protection standards under the UK General Data Protection Regulation (UK-GDPR)⁹ and the oversight of the Information Commissioner’s Office (ICO)¹⁰, alongside financial regulations from the Financial Conduct Authority (FCA). ¹¹

• Crowdfunding platforms that offer equity or debt must be FCA-authorised; collecting and processing investor data demands compliance with UK-GDPR (privacy policy, lawful basis for processing, transparency, data security) and registration with the ICO if required.
• If you run a reward- or donation-based campaign, you may avoid certain financial regulations, but data protection and consumer-protection laws¹² still apply. ¹¹
• You also need to be mindful of marketing and “financial promotion” rules¹³ if the crowdfunding involves securities: mass advertising to the general public may be restricted, or require additional disclosures and risk warnings. ¹⁴

In short: even though UK-GDPR does not force local storage, you still need robust data governance, privacy policies, and compliance with FCA and consumer-protection frameworks.

Saudi Arabia (and some parts of the Middle East)

For jurisdictions like Saudi Arabia, the data-protection and localisation landscape is evolving. As of 2025¹⁵, the Saudi Data and Artificial Intelligence Authority (SDAIA)¹⁶ regulates personal data processing, especially for “sensitive data,” including financial information. ¹⁷

• Under Saudi data-protection law, platforms processing data of Saudi residents may need to store certain categories of data locally and register with SDAIA as data controllers if they handle personal data.
• Transfers of personal data outside the Kingdom may be subject to restrictions, or require local representation if the data controller has no presence inside Saudi Arabia. ¹⁷
• For “sensitive” data (payment, investments, identity), compliance may include obtaining explicit written consent, strict security measures, and timely breach notification to both regulators and affected individuals.

Thus, if you plan to attract Saudi-based investors or run a platform active in Saudi Arabia, you need to understand Saudis’ data-protection and localisation requirements, which are stricter than GDPR in some respects.

How to launch a regulations-compliant crowdfunding platform

Building a crowdfunding platform is not only about technology and user experience. A platform is a financial service, which means compliance, investor protection, and regulatory alignment are non-negotiable. It is required to operate within legal boundaries from day one, and the fastest way to achieve this is through proper integrations rather than attempting to build a complete financial infrastructure in-house.

A white-label crowdfunding software, such as LenderKit, offers a compliant framework from the outset. It eliminates the need to develop critical components, such as investor onboarding, user verification flows, or payment infrastructure, from scratch. This approach follows how the industry has long operated: platforms keep control over branding and user experience, while regulated third parties handle custody, payments, and compliance-sensitive processes.

Common payment gateways used in crowdfunding

Neither founders nor crowdfunding platforms handle payments directly. Investor money moves through licensed payment gateways and custodial institutions. 

• MangoPay¹⁸: EU crowdfunding and marketplace payments
• Lemonway¹⁹: escrow and investor wallet management in Europe
• GoCardless²⁰: direct debit and recurring payments
• HyperPay²¹: widely used in the Middle East.
• North Capital²²: the U.S.

These integrations allow crowdfunding platforms to operate legally without becoming financial institutions themselves.

Identity verification providers used in crowdfunding 

Similarly, identity verification is outsourced to KYC / KYB / KYX providers who specialize in anti-money laundering screening and international compliance. The most widely used ones are:

• Shufti Pro²³: biometric KYC, KYB, AML screening worldwide
• Jumio²⁴: identity checks for regulated investment onboarding
• iDenfy²⁵: depending on the market.
• Focal by Mozn²⁶: risk scoring and AML compliance in the MENA region

With LenderKit, the platform itself never touches investor funds or performs manual identity verification. Instead, it connects to licensed services for payments and to professional KYC/KYB/AML providers for compliance screening. 

Platforms built on LenderKit can connect to MangoPay or Lemonway in Europe, HyperPay in MENA, or escrow services in the U.S like NorthCapital. 

These integrations are thoroughly tested across real platforms, ensuring faster, safer implementation and alignment with regulatory expectations. This lets founders focus on fundraising while maintaining regulatory alignment from day one. 

To discuss your crowdfunding platform requirements and schedule a LenderKit demo, please get in touch with our team.