Eric Brouwer: Crypto market remains challenging in Ireland
Eric Brouwer, trainee solicitor at LK Shields LLP, comments on the state of the Irish crypto market.
Operating in the Irish crypto market remains a challenge. Unlike in other jurisdictions where regulatory clarity has been provided, in Ireland, crypto businesses continue to operate in a grey area.
This has consequently put pressure on these businesses with some even reporting the loss of banking facilities due to regulatory concerns. In this article, I discuss the state of the Irish crypto market and touch upon the Central Bank’s response on the proposed EU crypto market regulation.
Banking and regulatory hurdles
The small cohort of Irish crypto businesses consisting of exchanges, ATMs, wallet providers, custodians, and mining operators (collectively “Irish Crypto Businesses”), continue to face challenges. Volatile prices, the bursting of the ICO bubble, regulatory crackdowns, and a disappointing “halving” of bitcoin are all factors that have imposed headwinds on the growth of this nascent industry. What is more, some Irish Crypto Businesses have had their banking facilities cut-off due to a perceived heightened risk of money laundering, despite them citing full compliance with the 5th Anti-Money Laundering Directive.
As a result, some Irish Crypto Businesses have had to obtain banking facilities from banks established in jurisdictions that are more open to crypto service providers. This is a bit of a shame from an Irish perspective as the crypto industry continues to show signs of maturity, especially in terms of developing banking relationships. For instance, in New York, a prominent crypto exchange recently secured banking services from one of the largest banking businesses in the world.
The main difference between the New York and Irish crypto market however comes down to regulation as the former jurisdiction has a regulatory framework that covers some crypto businesses. Ireland on the other hand has been drastically slow to act in this space with the Oireachtas and Central Bank providing little to no regulatory guidance. This lack of regulatory clarity not only slows development in this space but also imposes hurdles as Irish Crypto Businesses continue to operate in a grey area.
Instead of promoting crypto, Ireland has chosen to herald blockchain as the next greatest thing since sliced bread. This has consequently skewed the perception of crypto in Ireland as “bad” and blockchain as “good”. For instance, the Central Bank has released two warnings on crypto, both of which paint crypto as a dodgy asset class prone to manipulation and ripe with risk. Of course, that sentiment is rightly justified in many respects. The problem however is that it has painted the Irish crypto industry with such a broad brush that it has caused the Irish crypto market to lag behind other jurisdictions.