Crypto

The term crypto is most often used to refer to cryptocurrencies.

Standard currencies are types of money, for example, the euro, that you can spend using physical notes and coins.

Cryptocurrency exists digitally or virtually and is transferred digitally. Transactions are recorded and verified using a technology called blockchain. This is known as distributed ledger technology which means that it is a record that is widely shared and is not controlled by any single person or organisation.

Examples of cryptocurrencies include Bitcoin and Ethereum but there are many others.

Crypto is not banned in Ireland so it is not illegal. There are not very many laws about crypto, so it is said to be largely unregulated.

Some new laws are being introduced by the European Union. These will require the providers of crypto services to get authorisation to operate in the EU.

The Central Bank of Ireland describes crypto as being more like a very high-risk speculative asset than a currency. This is because crypto has had very big increases and decreases in value that happen very quickly and it can be used to make purchases only in limited circumstances.

For this reason it recommends that you do not spend money on crypto if you cannot afford to lose it.

There are no protections such as the deposit guarantee scheme. This means you will have no comeback if you lose some or all of your money on crypto.

Crypto can be very complex, making it difficult to understand what you are buying.

The Competition and Consumer Protection Commission (CCPC) has advice on common crypto scams.

The European Union (EU) is introducing a new law called the Markets in Crypto-Assets Regulation (MiCAR).

It will regulate service providers for crypto. For example, providers of services to store, trade or advise on crypto.

The creation of crypto-assets is controlled by the issuers of crypto. MiCAR will introduce rules that apply to the issuers of specific types of crypto that are linked to official currencies or other assets. These are known as stablecoins.

Other cryptocurrencies continue to be unregulated in how they are issued, for example, the way they are ‘mined’.

The Central Bank of Ireland is responsible for implementing the regulations in Ireland.

Authorisation of crypto service providers

Under MiCAR, Crypto-Asset Service Providers in the EU will have to be authorised by a central bank. The law comes into effect on 30 December 2024 but there will be a transitional (lead-in) period of 12 months before it applies to existing providers in Ireland.

Market abuse

MiCAR includes rules to ban market abuse of crypto transactions or services. This includes:

• Illegal disclosure of inside information
• Insider trading
• Actions likely to disrupt or manipulate the market

Issuers of stablecoins

Stablecoins are a type of crypto with a value that is linked to a more stable asset such as gold or a standard currency like the euro.

MiCAR introduces new rules for the issuers of 2 types of stablecoin:

• E-Money Tokens (EMTs), which are linked to a single official currency
• Asset-Referenced Tokens (ARTs), which are linked to several currencies, commodities or other types of crypto

The rules set out new requirements for information, marketing and funding. They apply to new issuers from 30 June 2024 and will apply to existing issuers when they are authorised.

There are no specific tax rules for crypto.

If you earn crypto, it is subject to income tax in the same way as other income. If your only other income is PAYE income, read about tax on income that is not from your employer.

If you make a profit from selling a crypto-asset, it is liable to Capital Gains Tax in the same way as gains from any other asset such as property.

If you get a gift or inheritance of crypto, it is liable to Capital Acquisitions Tax in the same way as other gifts or inheritances.

Revenue has a guide to taxation of cryptocurrencies and crypto-assets.