IRELAND Law and Practice Contributed by: Niall Esler, Shane Martin, James O’Doherty and Laura Whitson, Walkers
vice 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. Providing staking services may fall within exist - ing regulatory regimes depending on the legal classification of the crypto-asset in question. 10.7 Crypto-Related Lending MiCAR does not specifically address the lend - ing 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 European Commis - sion with this report, the EBA and ESMA have published a Joint Report on recent develop - ments 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 December 2024, ESMA published its Final Report on the Guidelines on the conditions and criteria for the qualification of crypto-assets as financial instruments, which provides further clarity on the classification of crypto-assets as derivative contracts. Firstly, with regards to crypto-assets as an underlying asset for derivatives, ESMA notes that national competent authorities and financial market participants should consider the possi - bility for crypto-assets to be eligible underlying
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, national competent authorities and financial market participants should consider the following as part of their assessment: • whether the rights of the crypto-asset hold - ers are contingent upon a contract based on a future commitment, creating a time-lag between the conclusion 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 settle - ment 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 regulatory landscape. DeFi transactions will require a case-by-case analysis to determine the regulatory categorisa - tion of the activities involved and jurisdictional questions regarding applicable legislation and relevant regulatory bodies. This is a rapidly developing area, and there is expected to be increasing regulatory interest in DeFi.
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