Ireland’s Central Bank is streamlining its crypto company authorization process as the EU prepares … [+] to implement MiCAR.
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Ireland’s Central Bank is enhancing its authorization process for crypto companies as the European Union prepares to implement the Markets in Crypto-Assets Regulation. Deputy Governor Derville Rowland announced this development during a speech at AFME’s 8th Annual European Compliance and Legal Conference on September 23, 2024.
The authorization process, which crypto businesses must complete to operate legally in Ireland, involves regulatory approval of a company’s financial stability, risk management systems, and compliance with anti-money laundering regulations. Rowland stated, “We have been working to continually improve our authorisation process,” adding, “Better risk assessment, better communication and better supervisory outcomes have been the output of that work.”
This move comes as part of Ireland’s preparation for MiCAR, a EU-wide regulatory framework for crypto-assets. MiCAR aims to establish consistent rules across EU member states for crypto-asset issuers and service providers. “We are working closely with our EU Peers and the ESAs to ensure the necessary coordination and consistency across Europe,” Rowland said.
Rowland highlighted the significant potential of blockchain technologies: “We can see the many areas where the blockchain has significant potential to bring about positive change, even transformation, in how we do things. Whether this be tokenisation of investment products or improvements in post-trade infrastructure and interoperability, there are important positive stories to tell.”
The Central Bank aims to strike a balance between innovation and risk management. “It is important that these benefits can be realised, whilst also ensuring that the risks are well understood and managed.” Rowland also noted the key role of regulation: “Regulation plays a crucial role in the safe, and therefore enduring, adoption of innovation into the system.”
Concerns Over Implementation And Compliance
While this move aims to simplify procedures, some industry representatives express concerns about potential challenges during implementation. “Talking about regulations in this industry is good, as governments are getting ready for mass-adoption. The problem is, how will these regulations hinder development, and most importantly, deployment,” says Daniel Logvin, CEO at LedgerByte. “Compliance is a very tough thing to achieve, especially when lots already have systems that work,” Logvin adds.
“It provides increased regulatory clarity, which will help support institutional trust, investor confidence and consumer protection,” notes Susana Esteban, Managing Director at FTI Consulting. However, she cautions that “It adds more compliance responsibilities (and potentially costs) for crypto companies and traditional financial entities working with digital assets.”
Ireland’s Potential As A Crypto Hub
According to an October 2023 article by Ben Strack in Blockworks, Ireland’s appeal to crypto companies has been growing for years. The Irish government launched an “Innovation Hub” in 2018, facilitating engagement between fintech firms and the Central Bank of Ireland. Coinbase opened its Dublin office in late 2018, while Gemini became the first Virtual Asset Service Provider (VASP) in Ireland in July 2022. MoonPay gained VASP status in August 2023, and Kraken received E-Money Institution authorization in September 2023.
“We welcome regulatory clarity and continued improvement and enhancements by regulators to adapt regulations to both protect users and markets but also balancing out the need to continue to foster innovation and growth,” says Gracy Chen, the CEO of Bitget. “Certainly Ireland is always high on the list for innovative companies to be based there as a global financial centre, its membership and access to the European Union as well as its favourable business environment including its deep talent pool. This certainly helps to encourage crypto-companies to consider Ireland more seriously as a base.”
“If Ireland pairs this with tax incentives or a business-friendly environment, it could become a hub for crypto firms, but this legislation is EU wide and it may have some competition for business,” suggests Richard Lofthouse the Head of Risk and Data Science at InFlux Technologies.
Balancing Regulation With Innovation In EU
MiCAR regulates previously uncovered crypto-asset activities in the EU, including their issuance, custody, administration, and trading on platforms and exchanges. “This could position the EU as a leader in crypto regulation, but being a leader in rules doesn’t always translate to success in the market. It’s important for the EU to find a balance between strong regulation and allowing room for innovation to stay competitive globally,” Logvin states.
Esteban concludes, “Regulatory certainty can be a competitive advantage. MiCAR provides regulatory guidelines, which could make EU-based crypto businesses more attractive to institutional investors and partners, boosting their global credibility.”
Disclosure: All quotes in this article without specific source citations were obtained in response to my inquiry through a specialized service that connects journalists with expert sources. The exception is the quote from Gracy Chen, which a PR specialist provided from the speaker at my request, while the quotes from Derville Rowland are taken from the text of her speech.
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Publish date : 2024-09-25 02:14:00
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