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Dáil Éireann Debate, Tuesday - 25 January 2022

Tuesday, 25 January 2022

Questions (241)

Louise O'Reilly

Question:

241. Deputy Louise O'Reilly asked the Minister for Finance the regulations that are in place and the powers the Central Bank has to ensure that social media influencers or others advertising or promoting the use of crypto-assets adequately warn consumers of the potential risks of such investment; and if he will make a statement on the matter. [2975/22]

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Written answers

As I have previously stated, I believe that innovations that increase the efficiency of financial services to consumers should be encouraged; however, innovations that fail to reach the high standards and controls that protect Irish consumers and underpin the integrity of the financial system, or those which put financial stability at risk, should not be allowed to flourish outside a regulatory and legal perimeter.

As of 23 April 2021, firms providing certain services in relation to Virtual Assets (also known as crypto-assets), known as Virtual Asset Service Providers (“VASPs”), are required to register with the Central Bank of Ireland for Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) purposes only. While Virtual Asset Service Providers are subject to AML/CTF requirements, however, they are not subject to prudential and conduct of business requirements at this time.

On 24 September 2020 the European Commission released its Digital Finance Package (www.ec.europa.eu/info/publications/200924-digital-finance-proposals). This contains a proposal for a new EU legislative framework for the Markets in Crypto-Assets (MiCA), which aims to enable and regulate markets in crypto-assets, including asset-referenced tokens (also known as 'stablecoins') and utility tokens as well as the tokenisation of traditional financial assets and wider use of distributed ledger technology (DLT) in financial services.

It is expected that MiCA will introduce provisions on advertising and marketing to ensure that marketing information should be clear, fair and not misleading. MiCA will be an EU regulation, not a Directive, so it will be applicable in Ireland as soon as the regulation comes into force.

My department has been working extensively in the negotiations relating to MiCA, with technical advice being provided across the department and the Central Bank of Ireland. The Central Bank informs me that it supports and welcomes a harmonised approach towards developing an appropriate regulatory framework for the markets in crypto-assets.

At an EU level, while the development of an appropriate regulatory framework continues, it is important to highlight that there is a consensus to adopt a conservative prudential approach towards crypto-assets which is line with that set out in the EBA’s January 2019 report (www.eba.europa.eu/eba-reports-on-crypto-assets).

The Central Bank continues to identify and closely monitor risks associated with crypto-assets, and has issued warnings to consumers on the risks of buying virtual currencies (www.centralbank.ie/consumer-hub/consumer-notices/consumer-warning-on-virtual-currencies). These warnings are more relevant than ever due to the marked increase in digital payments and transactions since the start of the COVID pandemic.

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