Crowdfunding is currently an unregulated industry in Ireland. In my Budget 2019 speech, I announced that my Department will begin work, in conjunction with the Central Bank of Ireland, on the national regulation of crowdfunding in Ireland.
With regulation, crowdfunding has the potential to play an important role in broadening competition in the SME finance market, beyond the banking system which is a key priority in terms of access for finance for SMEs. Regulation will also ensure that sufficient consumer protections are in place for non-sophisticated or non-professional investors and that such investors have all of the relevant information and are made aware of the risks involved in investing via crowdfunding.
The potential benefits of crowdfunding have been recognised at a European level where the negotiations on a draft regulation on the regulation of crowdfunding are underway. The purpose of the draft European regulatory regime for all crowdfunding service providers operating in the European Union is to reduce regulatory divergence and obstacles, facilitate and support crowdfunding activity as a means of providing finance to SMEs, and as part of completing the Capital Markets Union.
Given the development of the European regulation, it may not be necessary to introduce a domestic regime for Ireland. However, if the draft European regulation is delayed for a considerable period, a domestic regime, which is aligned with the proposed European regime, will be brought forward.