Regulation of cryptocurrency to be looked at amid €1m losses by Irish investor

John McGuinness TD was prompted to look into the issue after reading in the 'Irish Examiner' about a man duped out of €1m

Screengrab from Oireachtas TV of Fianna Fail TD John McGuinness. Picture: Oireachtas TV/PA

The Oireachtas Finance committee is seeking information from the Central Bank and Revenue about cryptocurrency following the loss of more than €1m by one Irish investor.

Committee chairman John McGuinness got agreement from colleagues today to put cryptocurrency on the committee's agenda.

At present, cryptocurrency is not regulated in Ireland and warnings have been issued by the Central Bank in the past year regarding the risks around investing in cryptocurrency opportunities.

The Fianna Fáil TD said a decision was taken to look at the area of cryptocurrency following the revelation in the Irish Examiner on Saturday that one man from the west of Ireland was duped out of over €1m after investing in what he thought was cryptocurrency.

Mr McGuinness said the committee will now write to the Central Bank and Revenue, seeking a briefing document from both regarding cryptocurrency. 

He continued: "Once we have briefed ourselves, we would then bring in the Central Bank, Revenue and various stakeholders and begin a discussion about this to highlight the good, the bad and the ugly in relation to cryptocurrency."

Revenue is expected to outline tax implications regarding cryptocurrency measures.

Because it is not regulated, people who invest in it have no consumer protection and no comeback — even if the company they are investing with is legitimate. Gardaí also say that legislation around fraud has not caught up with the evolution to cryptocurrency from physical banking.

The Finance Minister told Dublin Mid-West TD Emer Higgins that the Government had been  monitoring developments in area of virtual currencies over the last five years. File picture: Gareth Chaney/Collins

According to the Garda National Economic Crime Bureau, investment fraud has risen dramatically during the pandemic, with fraudsters zoning in on the growing obsession with cryptocurrency. In the 12 months between January 1 and December 31, 2021, there were 234 reports of investment fraud made to gardaí — up from 50 in 2019.

Investment research published in September by the Competition and Consumer Protection Commission, resulting from a survey of 1,002 adults across the country, showed that 36% of respondents have an investment product. Of those, 11% hold some kind of cryptocurrency.

The research revealed that investors under the age of 35 years are more likely to hold cryptocurrencies or other forms of crypto-assets, with 18% of those surveyed in the 24 to 35 years age category having invested in cryptocurrency. Just 6% of those aged between 45 and 54 have invested in it, with the figure decreasing to just 1% of investors over the age of 55.

Government monitoring developments

In an answer to a parliamentary question recently regarding regulation of cryptocurrency, put down by Fine Gael Dublin Mid-West TD Emer Higgins, Finance Minister Paschal Donohoe said that the Government has been monitoring developments in the sphere of virtual currencies in Ireland and internationally over the past five years.

In recent weeks, the Central Bank published its Securities Markets Risk Outlook Report, which examines key risks to security markets, and the actions to be taken to address such risks.

Among the products highlighted in the report were crypto assets, which, it said, are “likely to be highly risky and speculative”.

It pointed to a warning from the European Supervisory Authorities in February 2018 that urged consumers to be alert to the high risks of buying and/or holding these instruments, including the possibility of losing all their investment.