The Central Bank of Ireland has made a very tough decision regarding the crypto funds and the support that it provides to the cryptocurrency would in the first place. According to the Central Bank of Ireland, there are too many risks associated with the crypto funds as they aren’t really suited for all the retail investors who don’t have much expertise and experience with cryptocurrency to understand the crypto trading laws and rules.
However, the bank also mentioned that for professional traders and investors who have experience of dealing with cryptocurrency, there are no limitations for the trading activities.
The Central Bank of Ireland feels that the risks associated with crypto for retail investors are too high and that would definitely be a really good decision for sure. The bank has made the statement that it is not going to approve all the investment funds for certain retail investors of crypto because they definitely lack the knowledge and expertise on the high-risk asset class. This decision was made in order to protect the funds of the retail investors in Ireland, according to current news of cryptocurrency.
The February 2022 report which was named Securities Markets Risk Outlook Report: A Changing Landscape had a description of the different crypto assets as the newly defined product that was offered in securities markets and it was described as having complex features and was a potential threat to the protection of the investors.
Although it has been seen that the Bank of Ireland has managed to field different queries just last year regarding the AIF or the Alternative Investment Funds about crypto, it is definitely not going to approve the AIF on the retail crypto investments that are made.
However, the bank has also made it pretty clear that such investments would be suited more for the professional to wholesale investors since they have the experience of handling such issues and complications in the first place. Hence, professional investors are still allowed to make trade investments using cryptocurrency. However, the retail investors who have a pretty small approach aren’t allowed to be a part of the group.
The Central Bank said, “The Central Bank is highly unlikely to approve a UCITS or a Retail Investor AIF proposing any exposure to crypto-assets, taking into account the specific risks attached to crypto-assets and the possibility that appropriate risk assessment could be difficult for a retail investor without a high degree of expertise.”
A UCITS is basically an Undertaking that is designed for the Collective Investment of Transferable Securities that can be utilized in the European Union (EU) and can be described as a proper regulatory framework that can help in the proper management of different investments for the sale across the EU.
The Director of securities and markets supervision of Ireland Patricia Dunne has managed to provide certain explanations regarding the thinking of the Bank in an interview with Bloomberg on the 8th of February, mentioning that there are “too many unanswered questions around things like custody, money laundering, and even just volatility and liquidity” as far as retail crypto investing is considered.
Regulatory features to crypto in the nearby U.K. aren’t much more advantageous with Her Majesty’s Revenue and Customs (HMRC) which has laid out certain strict and new guidelines for DeFi taxation recently. There, returns made on crypto earned through staking are considered property, and thus subject to capital gains tax.
Yesterday, Russia’s government agreed on a regulatory scheme that will allow residents to trade crypto. Crypto will be treated as an “analogue of currencies” rather than a currency itself, and any transaction with a value greater than about $8,000 must be declared.