On 22 March 2018 the Minister for Finance and Public Expenditure & Reform, Paschal Donohoe T.D published a discussion paper prepared by his Department on virtual currencies and blockchain technology and announced the subsequent creation of an internal working group to monitor further developments in this area.
This follows the Department’s active research into virtual currencies and the blockchain ecosystem that exists in Ireland, Europe and globally. The discussion paper comprises an overview of virtual currencies and the blockchain technology supporting them; summarises actions taken by selected countries around the world; and sets out the key risks and opportunities these technologies present. This discussion paper is a proactive step forward by the Irish government and should be widely welcomed by those with an interest in this field in Ireland.
The announcement of the creation of a working group to monitor further developments in this area is of particular interest as one of the classic criticisms of all governments is that they lack knowledge of the current state of play and this can lead to missed opportunities and outdated regulation. Due to the pace of global development in this area the internal working group will be particularly helpful in informing government of state of the art virtual currencies and blockchains.
As alluded to in the discussion paper, up to now the government’s position on virtual currencies and blockchain technology has consisted with a few parliamentary questions, but it now appears as though Minister Donohoe recognises that there is an opportunity for Ireland in this area and government support will be needed if Ireland is to be instrumental in creating a predictable and open blockchain ecosystem.
The paper is informative and factual on the general use cases and advantages of virtual currencies and generally portrays virtual currencies and blockchain technology in a positive light. It recognises that Ireland is already home to a number of blockchain businesses and intimates that Ireland may become a destination where more virtual currency and blockchain technology businesses choose to establish.
The benefits of virtual currencies are clearly recognised with mention of near instant settlements, traceability, lower fees and security. It does of course give a balanced view and mentions the risks facing consumers, criminality association and price volatility. It does not really touch on ICOs other than to refer to them briefly, and so this is something the working group will have to look at in further detail, given the amount of ICOs flocking into Ireland presently.
In conclusion it does look like that as predicted, Ireland will look positively towards virtual currencies and blockchain technology and eventually provide a regulatory framework which would promote innovation for start-ups and entrepreneurs and ensure Ireland has a differentiating competitive advantage. This paper is an important step for the Irish government and hopefully the internal working group can stay abreast of the latest developments in this area as parts of the paper, while only a number of days old, are already out of date. This is particularly important as the whitepaper does not intimate any proposed regulation or legislative framework, which would lead many experts to believe that regulation is 12-18 months away at a minimum.
Susan Cosgrove is principal of Cosgrove Gaynard solicitors and Emmet Creighton is a technology lawyer in Cosgrove Gaynard solicitors based in Dublin, Ireland .
Fintech is a particular area of expertise of the firm. We have extensive experience in this area in particular in relation to blockchain and ICOs providing an innovative and practical solution driven service to clients . We are at the forefront of this area of law being the first firm to confirm they have acted for a number of ICOs in Ireland.