Finance Minister Michael Noonan has today launched a crowdfunding public consultation, which will run for a period of six weeks up to June 2.

Crowdfunding is where finance can be raised from a large number of individuals or institutional investors through online platforms. It can be used to fund businesses, projects or personal loans. 

Crowdfunding is a technology-based continually evolving market-based finance that can help stimulate funding to small and medium-sized enterprises (SMEs) as well as personal lending, a statement from the Department of Finance said.

It also provides consumers and small investors with access to investment opportunities that offer a higher rate of return - at a higher risk - than is generally available from traditional credit institutions, it added. 

Crowdfunding is not currently regulated by the Central Bank here.

"Ensuring that the development of this exciting and innovative form of finance is facilitated for the benefit of the economy, while also ensuring adequate protection for consumers providing funds through crowdfunding platforms is of critical importance," Mr Noonan said today.

"This consultation will inform our thinking and will assist in the consideration of whether a regulatory regime would be appropriate for crowdfunding, given that there is no dedicated harmonised regulation for crowdfunding and the existing European financial services legislation was not designed with crowdfunding in mind," the Minister added.

Commenting on today's development, Niall Dorrian, CEO of Linked Finance, said the introduction of a robust regulatory regime in Ireland could help to enhance confidence.

"It is important, however, that the introduction of any such regulatory framework works in the interest of all stakeholders and does not stifle the growth of this vibrant and innovative sector," he added.

Linked Finance is the biggest peer-to-peer lender in Ireland.