The Department of Finance (the "Department") has launched a public consultation to gather industry insights and views on the potential regulation of crowdfunding in Ireland. This marks a significant step towards the introduction of a bespoke regulatory regime for crowdfunding and presents an opportunity for industry stakeholders to shape the future of crowdfunding in Ireland.
The Public Consultation
On 21 April 2017 the Department launched a public consultation on the potential regulation of crowdfunding in Ireland. Under the International Financial Services 2020 Action Plan 2017 the Irish Government committed to pursuing this public consultation in the context of the European Commission's Action Plan on Building a Capital Markets Union. Prior to this there had been no major developments in the Irish crowdfunding market since June 2014 when the Central Bank of Ireland (the "CBI") published a Consumer Notice on Crowdfunding and Peer-to-Peer Lending. We previously reported on the Consumer Notice, the industry disrupting potential of crowdfunding and recent UK developments (see our previous updates here and here) but the current public consultation illustrates a recognition of the growing importance of crowdfunding in Ireland.
As part of the public consultation, the Department is seeking input from various industry stakeholders in order to understand better how to facilitate the development of crowdfunding in Ireland in a way that benefits the economy while also ensuring adequate protection for investors and consumers. The objective of the public consultation is:
"to seek the views of interested parties on whether a regulatory regime would be appropriate for the crowdfunding sector, or if such a regime (or limited regime) with its inherent obligations and costs would be an impediment to the development of crowdfunding in Ireland."
In the public consultation paper published by the Department, certain costs associated with the regulation of crowdfunding are identified including:
- the cost of CBI resources required to regulate the industry, which would be recoverable via an industry levy (as with other regulated sectors);
- the costs for industry in terms of obtaining authorisations and complying with ongoing reporting requirements commensurate with the level of industry risk identified by the CBI; and
- the increased costs for users of crowdfunding platforms, which would reduce returns and increase the cost of equity or credit (as the case may be).
The public consultation will conclude on 2 June 2017 and any submissions received will be used to inform the future development of regulatory policy on crowdfunding in Ireland.
While the European Commission continues to actively monitor developments in crowdfunding markets, in the absence of EU level regulation Ireland may follow the approach of other EU countries such as Germany and France and introduce a domestic regulatory regime for crowdfunding. This public consultation is the first step in that process and may prove pivotal in shaping the future of crowdfunding in Ireland.