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Banking Sector Regulation

Dáil Éireann Debate, Wednesday - 15 January 2014

Wednesday, 15 January 2014

Questions (137)

Terence Flanagan

Question:

137. Deputy Terence Flanagan asked the Minister for Finance Ireland and the Central Bank of Ireland's current position on Bitcoin; and if he will make a statement on the matter. [1228/14]

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Written answers

I am informed by the Central Bank that crypto-currencies such as Bitcoin are not services regulated by the Central Bank and are not legal tender in the Euro area. Consumers using Bitcoin should be aware that it is not covered by any Irish regulatory protections and does not fall under the Deposit Guarantee Scheme or the Investor Compensation Fund, so consumers would be liable for all potential losses in full.

The Deputy may also be aware of a statement issued by the European Banking Authority on 12 December 2013 warning consumers of the possible risks they may face when buying, holding or trading virtual currencies such as Bitcoin. No specific regulatory protections exist that would cover consumers for losses if a platform that exchanges or holds virtual currencies fails or goes out of business. While the EBA is currently assessing all relevant issues associated with virtual currencies, in order to identify whether virtual currencies can and should be regulated and supervised, consumers are advised to familiarise themselves with the risks associated with them.

I would also draw the Deputy's attention to my reply to a Dail question on 10 December 2013 in which I noted that the Revenue Commissioners had advised me that e-commerce, including the use of virtual currencies, present a challenge to tax administrations throughout the world. Specifically, regarding the possible use of crypto-currencies (including Bitcoin) to circumvent taxes, the Revenue Commissioners and tax administrations in other countries are actively monitoring developments. Because Bitcoin is a combination of some factors that constitute a commodity and some that constitute a currency, the implications for taxation are varied.

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