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Irish Central Bank is “highly unlikely” to support retail investors in their endeavour to gain exposure to crypto assets. Like many jurisdictions, the central bank notes that crypto-assets carry a high level of risk that can be harmful to investors.

This comes as the European crypto regulatory framework is shifting. While some member states have become more open towards crypto investments, some have been restricting access to these assets citing their volatile nature.

Crypto assets carry risks

The bank explained several reasons for banning retail traders from investing in cryptocurrencies. These reasons include the “specific risks attached to crypto assets” and “the possibility that appropriate risk assessment could be difficult for a retail investor without a high degree of expertise.”

The restriction introduced by the central bank falls under the Undertakings for Collective Investment in Transferable Securities (UCITS). These include organizations that have collectively invested in securities. These organizations are also regulated by the European Union.

The restriction by the regulatory body also includes alternative investment funds. These funds are not regulated by the directive of the UCITS. It also includes hedge funds, private equities and real estate funds per the recommendations provided by the European Commission.

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Crypto assets are available to wholesale investors

The Irish central bank added that cryptocurrencies are highly risky and speculative assets. While this risk exists, the regulatory body added that “at the moment”, they are only suitable investments for wholesale and professional investors.

The Irish central bank gave this announcement as part of the second annual Securities Markets Risk Outlook Report. However, this is not the first time that the central bank is mentioning this. It had issued a similar report regarding UCITS and AIFs in December 2021.

The crypto regulatory framework in Europe has changed significantly. As aforementioned, some European nations have supported cryptocurrencies. Over the past year, several cryptocurrency exchange-traded funds (ETFs) have been launched in Europe. Earlier on, some legislatures in Europe had advocated for a ban on proof-of-work mining processes due to the high amounts of energy consumed.

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