The Irish central bank said in its second annual Securities Risk Outlook Report, that it is “highly unlikely” to allow non-professional investors to invest in cryptocurrencies, noting that the asset class is very risky and speculative.
Referring to the funds owned by retail investors as Undertakings for Collective Investment in Transferable Securities (UCITS) and Alternative Investment Funds Managers Directive (AIFMD), Patricia Dunne, the director of securities and markets supervision mentioned in the report that a lot of queries have been brought up regarding whether UCITS or authorized AIFs to be invested, either directly or indirectly, in crypto assets.
In reply to the queries, the central bank stated, “At the moment, while such assets may be suitable for wholesale or professional investors, the Central Bank is highly unlikely to approve a UCITS or a Retail Investor AIF proposing any exposure (either direct or indirect) to crypto-assets…”
The report continued stating the reason for the decision of the country’s central bank, “…taking into account 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.”
Terming digital and crypto-related assets along with Special Purpose Acquisition Companies (SPACs) as new securities market products for investors, Ireland’s central bank mentioned in the report that as retail investors are in search of yield, they look into such alternative products and thus expose themselves to risks.
While expert and professional investors can deal with those risks, retail investors might not be able to cope. So to protect retail investors, the central bank will not allow them to invest in crypto.
Meanwhile, some Irish crypto investors in recent times have been victims of crypto fraud. Coinfomania reported last week that a woman in her 60s was arrested by Irish law enforcement agents for her involvement in a cryptocurrency scam. The woman, who has been arrested and was held at Irishtown Garda Station, caused the victim to lose €1 million ($1.1 million).
