I am advised, that due to the nature of the technology underpinning bitcoin and other cryptocurrencies, it remains challenging to measure the number, and value of transactions that take place in any one country or jurisdiction. Cryptocurrencies possess capabilities that allow for individuals to transact anonymously if they so wish. This makes it difficult for regulators and authorities to gain oversight of the beneficial owners associated with each cryptocurrency transaction. This is as true for Ireland, as it is for any other country.
The exchanges and platforms on which cryptocurrencies are traded are currently not regulated, and do not require an authorisation or licence from the Central Bank of Ireland (Central Bank). Consumers should note that virtual currencies remain unregulated, and that there are no regulatory protections for consumers when holding, buying or selling virtual currencies.
In December 2017, the Central Bank issued an “Alert on Initial Coin Offerings” (ICOs). An ICO refers to the process by which newly issued cryptocurrencies can be exchanged for traditional fiat currencies. The Central Bank’s alert outlined numerous risks associated with ICOs, and can be found on the Central Bank’s website at: www.centralbank.ie/consumer-hub/consumer-notices/alert-on-initial-coin-offerings .
With regard to forthcoming regulation, The Fifth EU Anti-Money Laundering Directive (5AMLD) will introduce measures to mitigate some of the money laundering and terrorist financing risks presented by cryptocurrencies. Agreement has been reached at EU level on the 5AMLD proposals. However, transposition into domestic legal frameworks has not yet taken place.
As part of 5AMLD, Virtual Currency Exchanges (providers of exchange services between virtual currencies and fiat currencies) and Custodian Wallet Providers (entities providing services to store and transfer cryptocurrencies on behalf of its owners) act as a gateway between the cryptocurrency “ecosystem” and the traditional financial system. 5AMLD, once implemented, will mean that Virtual Currency Exchanges and Custodian Wallet Providers will be subject to Anti Money Laundering (AML) laws as “designated persons” under Irish law. As such, they will be subject to regulatory supervision and oversight in respect of their anti-money laundering and counter-terrorist financing obligations.
Officials in my Department have been monitoring, and will continue to monitor, any developments that arise in relation to this matter. They have also been liaising with the Central Bank in the context of the National Money Laundering and Terrorist Financing Risk Assessment. Finally, at a European level the Central Bank continues to contribute to the work of the European Supervisory Authorities in this area.
