Virtual Currencies & Blockchain Technology
Intra-Departmental Working Group
On the 22nd of March 2018, the Minister for Finance and Public Expenditure & Reform, Paschal Donohoe T.D announced the creation of an internal working group to monitor further developments in the areas of virtual currencies and blockchain technology. This follows the Department’s active research into virtual currencies and the blockchain ecosystem that exists in Ireland, Europe and globally. A link to the press release and the Minister’s statement can be found below:
Aims of the Intra-Departmental Working Group
- Monitor developments at a global (e.g. Financial Stability Board, Financial Action Task Force, International Monetary Fund) and European level (e.g. European Commission, European Parliament and European Central Bank) in relation to virtual currencies and blockchain, and to provide input into the discussions as and when required.
- Build knowledge of developments in the technology with an aim to identify risks and assess potential economic opportunities for Ireland.
- Engage with subject matter experts across industry, academia and the private sector to help 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 technology across Government.
- Align with Ireland’s IFS2020 strategy to foster opportunities in international financial services by building on the country’s strengths in technology, research and financial services.
Discussion Paper: Virtual Currencies and Blockchain Technology
Alongside the announcement of the working group, a discussion paper was released on virtual currencies and blockchain technology. The paper provides an overview of the potential of blockchain technology, and raises considerations on how virtual currencies impact consumers and companies on several fronts including: consumer protection, EU regulations, data protection, taxation and contract law.
Competition & Consumer Protection Commission (CCPC) Notice on Virtual Currencies
When partaking in transactions relating to virtual currencies, consumers should refer to the guidance provided by the Competition & Consumer Protection Commission (CCPC). This notice provides consumers with both an overview of virtual currencies and some of the consumer protection issues that should be taken into consideration.
In December 2017, the Central Bank of Ireland issued an alert in relation to Initial Coin Offerings (ICOs) that echoed warnings previously published by the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA). In February 2018, the Central Bank of Ireland issued a further warning to consumers and investors regarding the risks of investing in virtual currencies. Links to these statements are listed below:
- Central Bank of Ireland Alert on Initial Coin Offerings (Dec-17)
- Central Bank of Ireland Consumer Warning on Virtual Currencies (Feb-17)
- European Banking Authority Warning to Consumers on Virtual Currencies
- ESMA, EBA and EIOPA Warn Consumers on the Risks of Virtual Currencies
On 15th May 2018, the Office of the Revenue Commissioners published a tax and duty manual relating to the tax treatment of transactions involving virtual currencies. The manual outlines tax considerations that apply to Income Tax (IT), Corporations Tax (CT), Capital Gains Tax (CGT), Value Added Tax (VAT) and Pay As You Earn (PAYE). A copy of this manual can be found by visiting the Revenue website below:
Further Value Added Tax Considerations
Businesses should also consider the Value Added Tax (VAT) implications of their activities when partaking in transactions that involve virtual currencies. For further information on this topic, please see the below section: