In April 2017, the Department of Finance launched a public consultation on the possible regulation of crowdfunding in Ireland. In October 2017, the European Commission then signalled its intention to publish its proposal for an EU-wide framework on crowdfunding and peer-to-peer lending by the end of Q1 2018.

In light of the Commission’s intentions, in its January 2018 Feedback Statement on the public consultation, the Department of Finance noted that it was not, at that time, suggesting the introduction of domestic legislation to deal with crowdfunding, and that it would instead monitor the progress of the Commission’s proposal, and implement any resulting EU legislation into Irish law.

In March 2018, the Commission put forward its proposal for an opt-in regulatory regime for crowdfunding platforms that want to operate on a cross-border basis. The Commission’s proposal would apply to crowdfunding service providers (CSPs) involved in either:

• peer-to-peer business lending where the investor has an expectation of a financial return; or
• the investment crowdfunding model, where investors receive shares or bonds in return for their investments.

Under the Commission’s proposal:

• there will be uniform rules at EU level, but CSPs can instead opt to provide their services on a domestic basis under national law;
• if a CSP applies for EU-level authorisation, it will be able to passport its services into other EU Member States; and
• if a CSP is authorised at EU-level, it will not need to comply with national rules.

However, the IFS 2020 Action Plan 2019, published this month by the Department of Finance, noted that it is now proposed to regulate crowdfunding in Ireland by putting in place a domestic regulatory regime, in parallel with the Commission’s planned framework, “to ensure sufficient consumer protection for unsophisticated investors and to facilitate the growth of crowdfunding as an alternative source of finance for Irish SMEs”.

An update report will be provided by the Department on this proposal in Q4 2019.

Ireland is an attractive location for crowdfunding platforms and for peer-to-peer lending more generally. The industry should not fear a regulatory regime which is proportionate and low-cost, as the enhanced investor confidence that would come with this should result in continued growth.

We will issue further updates as developments occur both at EU level, and at national level.

For further information, read our earlier briefings on the possible regulation of crowdfunding, or contact any member of our Alternative Lending Group.

Crowdfunding: Should it be regulated? Department of Finance begins industry consultation (April 2017)

Crowdfunding Update: European Commission proposal awaited; Department of Finance publishes Feedback Statement (January 2018)