What has happened?

Ireland has published a discussion paper on digital currencies and blockchain and announced the creation of a working group to monitor developments in this area.

What does this mean?

The Irish Department of Finance has released a discussion paper, entitled "Virtual Currencies and Blockchain Technology".

The paper presents the department's research into virtual currencies and the blockchain ecosystem in Ireland, Europe and globally.

It also includes an overview of virtual currencies and the blockchain technology supporting them, summarising the actions taken by various countries around the world in respect of virtual currencies, as well as the key risks and opportunities for consumers and organisations.

One notable proposal is the creation of a working group to co-ordinate the approach to virtual currencies and monitor developments in blockchain technology, "addressing considerations raised by consumers, industry, the EU, and governments worldwide".

The working group will:

  • Monitor developments at European (i.e. European Central Bank, European Banking Authority, European Securities and Markets Authority, European Commission, European Insurance and Occupational Pensions Authority) and global level (i.e. Organisation for Economic Co-operation and Development, International Monetary Fund) in relation to virtual currencies and blockchain and provide input into the discussions as and when required.
  • Maintain up to date knowledge of developments to identify risks and assess potential economic opportunities for Ireland.
  • Engage with industry and subject matter experts in the private and professional sectors to build a dynamic communication flow.
  • Liaise with other areas of government to assess where involvement might be required.
  • Consider whether suitable policy recommendations are required.
  • Assist in promoting a better understanding of the area covered by the paper, across government.

The paper states that Ireland is already home to a number of blockchain businesses, some of which have attracted venture capital.

It also acknowledges that blockchain presents an opportunity to help deliver the country's IFS 2020 objectives by fostering growth in the technology sector, while supporting local companies and helping to attract foreign investments.

Previously, the Central Bank of Ireland issued alerts on initial coins offerings and, in February this year, it also issued warnings to consumers and investors regarding the risks of investing in virtual currencies.

With the release of the report, it now appears that Ireland is recognising that there is an opportunity for the country in the blockchain area and that government support will be vital to further the country's ambition to create an open and reliable blockchain ecosystem.

The Minister for Finance and Public Expenditure & Reform, Paschal Donohoe T.D, said:

“The Government’s IFS2020 vision is to be recognised as a global location of choice for specialist international financial services by building on our strengths in talent, technology, innovation and excellent client services, while focussing on capturing new opportunities in a changing marketplace and embracing the highest standards of governance. By engaging with virtual currencies and blockchain technology, Ireland, through the work undertaken by the Department of Finance, can be instrumental in creating a predictable and open blockchain ecosystem in Ireland and furthering that ambition.”

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