IRELAND Law and Practice Contributed by: Niall Esler, Shane Martin, James O’Doherty and Laura Whitson, Walkers
Direct exposure by QIAIFs to digital assets con - tinues to be prohibited by the Central Bank, pending satisfactory demonstration that the depositary safekeeping obligations can be com - plied with in accordance with the Alternative Investment Fund Managers Directive (Directive 2011/61/EU). The Central Bank provides for a pre-submission approval process in the event a QIAIF proposes to invest indirectly in digi - tal assets in excess of the thresholds outlined above or to seek to make any direct investment in digital assets. On 7 May 2024, ESMA issued its Call for Evi - dence on the review of the UCITS Eligible Assets Directive (2007/16/EC) to assess possi - ble changes to the eligibility rules under which UCITS may gain direct and indirect exposures, including in respect of certain asset categories that may give rise to divergent interpretations and/or risk for retail investors, including cryp - to-assets. With respect to indirect exposures, ESMA is particularly interested in stakeholder input on exchange-traded products, including ETFs with crypto-assets as an underlying. ESMA is due to deliver its technical advice to the Euro - pean Commission by April 2025. 10.11Virtual Currencies The legal treatment of any cryptocurrency or other blockchain asset will be determined by whether that particular asset’s features come within the scope of existing legislative and regulatory regimes. Typically, a pure cryptocur - rency will not be considered a financial instru - ment under MiFID II but would be considered a crypto-asset within the scope of MiCAR. 10.12Non-Fungible Tokens (NFTs) MiCAR will not apply to crypto-assets that are unique and not fungible with other crypto-assets. The recitals to MiCAR state that the fractional
parts of a unique and non-fungible crypto-asset should not be considered unique and non-fun - gible, and that the issuance of crypto-assets as NFTs in a large series should be considered as an indicator of their fungibility. Therefore, cat - egorisation will depend on the individual char - acteristics of an NFT. A case-by-case analysis is also required to understand if an NFT would be considered a financial instrument under MiFID. PSD2 introduced two new regulated payment services which, in summary, allow customers to use third parties to obtain payment initiation services, and enable third parties to access pay - ment data to provide account information ser - vices. This facilitates open banking. Application programming interfaces are to be used for third- party access to online payment accounts. As part of the review of PSD2, the Commission carried out a targeted consultation on open finance framework and data sharing in the finan - cial sector. PSD3 will seek to improve the func - tioning of open banking through the removal of the remaining obstacles to the provision of open banking services, by improving customers’ con - trol over their payment data and by enabling new innovative services to enter the market. 11. Open Banking 11.1 Regulation of Open Banking 11.2 Concerns Raised by Open Banking PSD2 imposes certain conditions on access to and use of data by firms providing a payment initiation service or account information service. This includes a requirement for customer con - sent and other requirements in relation to secu - rity and the use of data.
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