Blockchain and Cryptocurrency Update
Cryptocurrencies is a sector that remains unregulated in Ireland. However, prospective anti-money laundering laws may be introduced in the near future. Should the proposed legislation be adopted, it shall place restrictions on the usage of cryptocurrencies in certain instances, specifically in respect of the funding of terrorism. Furthermore, the Criminal Assets Bureau and the Garda will be given further investigative powers permitting them to investigate the cryptocurrency sphere.
Concerns surrounding the lack of regulation of the blockchain sector could slow the development or implementation of this exciting new technology into business. With concerns surrounding its lack of transparency, lack of regulation and fear of illegal activity, the development of this exciting new technology could potentially be impeded. In Ireland, the Central Bank of Ireland (the “CBI”) continues to issue warnings, particularly in respect of whether a cryptocurrency can be regarded as legal tender. Its current stance is that cryptocurrencies are not legal tender nor are they regulated or guaranteed by the CBI.
The proposed new anti-money laundering laws would help bring some legitimacy to the cryptocurrency sphere and potentially increase consumer and investor confidence, provided the new rules are not so strict that they hamper development and growth in the area. It is clear that negative media coverage has a direct impact on investor confidence, as can be seen by the reducing values in cryptocurrencies and decline in initial coin offerings towards the end of 2018. As we continue to await regulation in this sector it is encouraging to see some movement in the direction of regulation in certain respects. The CBI is the competent authority in respect of the regulation of financial services in Ireland but it has not yet indicated to what extent regulation of this sector will apply.
For further information please get in touch with your usual Whitney Moore contact, Sophie Quinn or any member of our Corporate team.