Ireland’s crypto stance surprising amid an uncertain future

There is no shortage of reasons to be sceptical about the scandal-plagued crypto industry. But despite the misgivings of regulators, including the governor of the Central Bank, and amid a US crackdown on some of the biggest players in the sector, Ireland is still keen to explore its potential.

“Ireland supports the crypto industry,” Department of Finance officials said in a briefing document prepared for Taoiseach Leo Varadkar before a meeting with crypto exchange Gemini in May, and will “make strong representations during EU discussions on [the EU’s Markets in Crypto Assets (Mica) regulation], to propose that measures introduced in relation to crypto are equitable to those relating to fiat currencies”.

Gemini also met then-taoiseach Micheál Martin in April last year, according to the records released to Sinn Féin MEP Chris MacManus under the Freedom of Information Act. Meanwhile, a crypto White Paper prepared by Irish funds has been discussed at the Department of Finance’s fintech steering group and IDA Ireland has engaged with a number of crypto exchanges looking to set up here in recent years.

It is somewhat surprising that the Government appears to be making such an effort. Fear of missing out is perhaps one motivation. Other European countries, Malta and Germany to name just two, have already implemented legal frameworks for the sector even before Mica comes into play, making them attractive destinations for such companies. France, meanwhile, is rolling out the red carpet for US crypto trading platforms and service providers hungry for regulatory certainty amid the SEC’s crusade against the industry.

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Why should Ireland miss a potential jobs windfall, the argument presumably goes, when many of the biggest players such as Coinbase, Binance and others already have a presence here? There may also be an element of keeping up appearances, making sure that Ireland Inc’s doors are seen to be open for the most risk-taking, “disruptive” sectors.

In reality, as MacManus pointed out in a statement to The Irish Times, the industry is not a significant employer in the Republic and a future in which it could be is far from certain. Although crypto asset prices have recovered somewhat after last year’s rout, trading volumes have not and mass adoption seems like little more than a fantasy from our current vantage point.

There are also surely reputational risks, given the sector’s well-publicised foibles. At any rate, as US regulators continue to turn the screws, predictions about the crypto industry’s future as currently constituted should come with a large-print health warning.