Firstly, I would like to assure the Deputy that my Department is aware of the recent announcement relating to the cryptocurrency in question, and will continue to monitor developments ahead of its planned issuance in 2020. In March of last year, I announced the creation of the Blockchain & Virtual Currencies Working Group and tasked this Working Group with the role of examining matters relating to such innovations. Members of the Working Group have reviewed the materials published by the organisations responsible for its issuance, and will scrutinise any additional announcements that may be issued in the future.
I would like to highlight that unlike bitcoin and other cryptocurrencies, the announced intention for this particular cryptocurrency is for it to be backed by short term government bonds and a basket of fiat currencies issued by central banks. Given these traits, this particular type of cryptocurrency is often referred to as a ‘stablecoin’ to reflect the expectation that collateral will be put in reserve to underpin what is issued to purchasers.
The impact that the stablecoin in question may have on the Euro or monetary policy is largely unknown at this early stage, and its effect will largely depend on its ability to achieve a high rate of adoption. Furthermore, stablecoins will need to offer sufficient levels of security, speed and efficiency if they are to impact upon more traditional payments networks, which are themselves continually improving and innovating.
The protection of consumers and the security of citizens is of critical importance. The Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2019 is designed to give effect to the fifth EU Anti-Money Laundering Directive (5AMLD). This Directive includes provisions that virtual currency exchanges, and custodian wallet providers, will be required to meet the standards expected of regulated firms.
As a further indication of my Department’s commitment to consumer protection, the intra-departmental Working Group has already engaged with the Competition and Consumer Protection Commission (CCPC) to assist in the publication of guidance in relation to cryptocurrencies. Similarly, the Central Bank of Ireland, the European Central Bank, and other regulatory entities have issued warnings and guidelines relating to the various challenges these new technologies present.
Lastly, I would like to point out that the G7 has stated their intention to form a taskforce to look specifically at the topic of stablecoins. Stablecoins are innovations that could potentially have a global reach, and therefore require a global response. My Department will continue to engage with colleagues at a European and global level to monitor, and provide input to, developments relating to this emerging area of financial services.