The Central Bank of Ireland has released a statement that retail crypto investors are not likely to be approved for investment funds because they lack the knowledge to navigate the high-risk asset class.
The report for February 2022 Crypto assets were described as a new product offering in securities markets that is complex and a “potential threat to investor protection” in the Securities Markets Risk Outlook Report: A Changing Landscape.
Although the bank received numerous inquiries about crypto Alternative Investment Funds (AIFs) last year, it is now not expected to approve an AIF for retail crypto investors. Such investments, according to the bank, “may be suitable for wholesale or professional investors,” but are too complicated for small fish:
“The Central Bank is highly unlikely to approve a UCITS or a Retail Investor AIF proposing any exposure to crypto-assets, given the specific risks associated with crypto-assets and the possibility that appropriate risk assessment may be difficult for a retail investor lacking a high level of expertise.”
A UCITS is an Undertaking for the Collective Investment in Transferable Securities, which is used as a regulatory framework in the European Union (EU) for managing certain investments for sale across the EU.
Patricia Dunne, Ireland’s Director of Securities and Markets Supervision, told Bloomberg on Feb. 8 that there are “too many unanswered questions around things like custody, money laundering, and even just volatility and liquidity” regarding retail crypto.
Regulatory attitudes toward cryptocurrency in the neighboring United Kingdom aren’t much better, with Her Majesty’s Revenue and Customs (HMRC) recently laying out strict new guidelines for DeFi taxation. Returns on crypto earned through staking are considered property in that country, and thus subject to capital gains tax.
The Russian government agreed yesterday on a regulatory scheme that will allow residents to trade cryptocurrency. Crypto will be treated as a “analogue of currencies” rather than a currency in its own right, and any transaction worth more than $8,000 must be declared.
