The wrecked vessel is believed to be the Queen of Sweden, a merchant ship of the Swedish East India Company.
It hit a rock off the headland of Knab while seeking shelter in Bressay Sound, Shetland, after running into stormy weather on January 12, 1745.
Historic Environment Scotland (HES) said the wreck is of national importance as “arguably the best preserved remains of a Swedish East Indiaman located in waters around Scotland”.
It has recommended that the Scottish Government designate the area as a Historic Marine Protected Area (Historic MPA) and a consultation has been launched inviting people to give their views.
Historic MPAs aim to preserve marine historic assets of national importance, so they can be protected, valued and understood.
Philip Robertson, Deputy Head of Designations at HES, said: “The sinking of the Queen of Sweden was a significant event in the history of the Shetland Isles, and the wreckage that remains is a marine heritage site of national importance that can greatly enhance our knowledge and understanding of the Swedish East India Company and its trading activity around Scotland’s coasts during the 18th century.
“We believe that designating the site as a Historic MPA will promote its heritage value, and I’d like to encourage as many people as possible to take this opportunity to share their views about this important piece of our nation’s priceless marine heritage.”
It comes after First Minister Nicola Sturgeon last week announced a consultation on proposals to create a Historic MPA at Scapa Flow in Orkney, where vessels from the German High Seas fleet were scuttled in 1919.