The Central Bank of Ireland has stated that it is unlikely to approve investment funds for retail crypto investors because they lack the knowledge to navigate the high-risk asset class.

The February 2022 Securities Markets Risk Outlook Report: A Changing Landscape described crypto assets as a new product offering in stock markets that is complex and a “potential threat to investor protection.”

Although the bank answered many inquiries last year about Alternative Investment Funds (IDAs) regarding cryptocurrencies, it is not now expected to approve an AIF for retail cryptocurrency investors. The bank believes such investments “may be suitable for wholesale or professional investors” but are too complicated for minnows:

“It is highly unlikely that the Central Bank will approve a UCITS or a retail investor AIF proposing any exposure to crypto assets, taking into account the specific risks associated with crypto assets and the possibility that a proper risk assessment could be difficult for an investor. retail investor without a high degree of specialization.”

A UCITS is an Undertaking for Collective Investment in Transferable Securities that is used in the European Union (EU) as a regulatory framework to manage certain investments for sale throughout the EU.

Ireland’s director of securities and markets supervision, Patricia Dunne, provided an explanation of the bank’s thinking to Bloomberg on February 8, saying there are “too many unanswered questions about things like custody, money laundering and even just the volatility and liquidity” regarding retail crypto investment. .

Related: US Lawmaker Pushes for State-Level Regulations on Stablecoins in Hearing on Digital Assets

Regulatory attitudes towards cryptocurrencies in the nearby UK are not much more favourable, with Her Majesty’s Revenue and Customs (HMRC) recently setting strict new guidelines for the taxation of DeFi. There, the returns obtained with the cryptocurrencies obtained through the participation are considered property and, therefore, are subject to capital gains tax.

Yesterday, the Russian government agreed to a regulatory scheme that will allow residents to trade cryptocurrencies. Crypto will be treated as a “currency analog” rather than a currency in its own right, and any transaction worth more than $8,000 must be declared.

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