Jim O'Callaghan
Question:106. Deputy Jim O'Callaghan asked the Minister for Finance whether cryptocurrency constitutes a social and economic threat to Irish citizens. [21228/23]
View answerTuesday, 9 May 2023
Questions (106)
Written answers
The technology that supports the issuance of cryptocurrencies, known as distributed ledger technology (“DLT”) offers technical innovations to enhance transparency, security and efficiencies within financial markets. That being said, it is essential that new technological innovations that fail to meet the highest of standards of consumer protection and protect the integrity of our financial systems, should not be allowed to flourish without defined regulatory and legal parameters.
To date Ireland has already ensured that companies offering crypto asset services in Ireland must register with the Central Bank of Ireland as outlined in the 5th Anti-Money Laundering Directive (“5AMLD”). Respective businesses which currently act as a gateway between the traditional finance system and he the cryptocurrency ecosystem, are “designated persons” under Irish Law and therefore must comply with anti-money laundering and counter-terrorist financing rules by performing client due diligence checks and other requirements when on-boarding customers.
My Department, together with the Central Bank of Ireland have been engaged in E.U. wide negotiations to establish a framework for crypto assets where they are currently out of scope from existing EU legislation. I am pleased to announce that on April 20th the European Parliament overwhelmingly voted in support of the Market in Crypto Assets Framework ("MiCA"), the most comprehensive regulatory framework for crypto assets of its kind. This will provide enhanced consumer protections while also preserving the opportunities for technological innovation which Irish companies can be a part of.
First introduced by the Digital Finance Package of 2019, the MiCA framework will seek to:
a) bring legal clarity to consumers and companies;
b) define what crypto-assets fall within its perimeter;
c) safeguard financial stability;
d) ensure smooth operation of payment systems and monetary sovereignty; and
e) ensure consumers are protected and f) foster innovation throughout the EU.
An 18 month transition period has now commenced following approval by the European Parliament. In the interim, businesses offering virtual asset services will continue to be subject to the 5AMLD transposed into Irish law by way of the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021 ("2021 Act") and the provisions of the 2021 Act that relate to Virtual Asset Service Providers commenced on 23 April 2021.
Officials from my Department, together with colleagues in the Central Bank of Ireland, will continue to work closely as part of the preparations for the implementation of MiCA. Further, the Central Bank continues to monitor development related to the sector to assess risks to consumer protection and financial stability. I also note the work by the Competition Consumer Protection Commission earlier this year to a target social media campaign to make consumers aware of the risks of investing in crypto assets and to make them aware of vulnerabilities of targeted investment practices.