IRELAND Law and Practice Contributed by: Niall Esler, Shane Martin, Laura Whitson and Coleen Wegmann, Walkers
services between crypto-assets and/or crypto-assets and funds. 10.6 Staking MiCAR does not contain provisions specific to stak - ing and therefore does not create specific require - ments or licensing obligations for staking. However, the European Commission confirmed that where the staking service provider holds the private keys to the staked crypto-assets, the service provider is required to be authorised under MiCAR to provide custody and administration of crypto-assets on behalf of clients. Depending on the arrangements between staking service providers and customers, other MiCAR CASP services may be relevant. The provision of staking services may fall within exist - ing regulatory regimes, depending on the legal clas - sification of the crypto-asset in question. 10.7 Crypto-Related Lending MiCAR does not specifically address the lending and borrowing of crypto-assets, including EMTs; instead, it proposes that the Commission shall present a report to the European Parliament containing an assessment of the necessity and feasibility of regulating lending and borrowing of crypto-assets. To assist the Euro - pean Commission with this report, the EBA and ESMA have published a Joint Report on recent developments in crypto-assets, including lending and borrowing of crypto-assets. Lending services relating to crypto-assets may fall within existing regulatory regimes, depending on the legal classification of the crypto-asset in question. 10.8 Cryptocurrency Derivatives In March 2025, ESMA published its Guidelines on the conditions and criteria for the qualification of crypto- assets as financial instruments, which provide further clarity on the classification of crypto-assets as deriva - tive contracts. Firstly, with regards to crypto-assets as an underly - ing asset for derivatives, ESMA notes that NCAs and financial market participants should consider the possibility for crypto-assets to be eligible underly -
ing assets in derivative contracts for the purposes of MiFID II. Secondly, ESMA notes that crypto-assets themselves can be qualified as derivatives. In this regard, NCAs and financial market participants should consider the following as part of their assessment: • whether the rights of the crypto-asset holders are contingent upon a contract based on a future com - mitment, creating a time-lag between the conclu - sion and performance of the obligations under such contract; • whether the crypto-asset’s value is derived from that of an underlying asset; and • whether the crypto-asset follows the settlement modalities as referred to in MiFID II. Where the crypto-asset serves as an eligible asset in derivative contracts for the purposes of MiFID, or where the crypto-asset itself amounts to a derivative contract within scope of MiFID II, entities providing investment services, as defined in MiFID II, in relation to such crypto derivatives may need to consider the impact of MiFID II on their business. 10.9 Decentralised Finance (DeFi) DeFi presents challenges for EU regulatory authorities, as it does not sit neatly within the existing regula - tory landscape. DeFi transactions and decentralised exchanges will require a case-by-case analysis to determine the regulatory categorisation of the activi - ties involved and jurisdictional questions regarding applicable legislation and relevant regulatory bodies. This is a rapidly developing area, and there is expect - ed to be increasing regulatory interest in DeFi. MiCAR should not apply where crypto-asset services are provided in a fully decentralised manner without any intermediary. MiCAR instead proposes that the Commission shall present a report to the European Parliament containing an assessment of the develop - ment of DeFi in the crypto-assets markets and of the adequate regulatory treatment of decentralised cryp - to-asset systems without an issuer or CASP, includ - ing an assessment of the necessity and feasibility of regulating DeFi. In January 2025, the EBA and ESMA
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