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Equity-Based Crowdfunding in China: Beginning with the First Crowdfunding Financing Case

  • Duoqi XU (a1) and Mingyu GE (a1)


Although the legality of equity-based crowdfunding was determined from a judicial point of view in the “first crowdfunding financing case” in 2015, there is no formal law, regulation, or rule released to regulate the crowdfunding financing. From a micro-perspective, determining the nature and workings of equity-based crowdfunding are two preconditions for determining the legal framework for and supervision of equity-based crowdfunding. The “Open, Public, Small-sum” characteristics defined the nature of public offering to the equity-based crowdfunding; therefore, it should be distinguished from private equity financing as a different category of online equity financing. Based on the original purpose of “financing facility” and the nature of “grassroots finance,” fundraisers shall enjoy exemptions on small sums, and the threshold of investors shall also be appropriately restricted, while the intermediary platform shall be the regulatory focus. From a macro point of view, the supervision of equity-based crowdfunding should seek a balance between “financial innovation” and “risk control.” Equity-based crowdfunding should not simply be considered a financing method. Rather, its positive effects on mass entrepreneurship and innovation should be emphasized so as to make it a particularly important “booster” to promote economic and social development.



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Professor of KoGuan Law School of Shanghai Jiao Tong University, Ph.D., Director of the Research Centre of Internet Financial Legal Innovation, Shanghai, China 200030.


Master degree candidate in economic law, KoGuan Law School of Shanghai Jiao Tong University. This article is the stage achievement of National Social Science Fund Project “The major theoretical and practical issues regarding to the access and supervision of China’s Internet finance market” (16BFX098). Correspondence to Mingyu Ge, 5th Building, No. 1954 Huashan Road, Xuhui District, Shanghai, China, 200030. E-mail address:;



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