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Blockchain Boom in Ireland, but Brexit Looms

Financiers and investors fear that a “no deal” Brexit could spell “bust” for Ireland and the nations’ blockchain industry.

Strong growth has returned to Ireland one decade after the banking crisis and international bailout. But, financiers and investors fear a “no deal” Brexit — in which the United Kingdom leaves the European Union without a trade agreement at the end of the month — could again destabilize Ireland’s boom-and-bust economy.

The U.K. received 11 percent of Ireland’s exports of goods in the past year, while supplying more than one-fifth of its imports. The Irish central bank conjectures that an orderly exit from the EU would decrease the gross domestic product by 1.5 percent, according to a Reuters story.

While the economic uncertainty — like in many countries — has driven curiosity in cryptocurrencies such as Bitcoin, Ethereum and others in Ireland ahead of Brexit, it casts a shadow over a burgeoning blockchain boom.

“It’s hard to see beyond the shadow of Brexit at the moment,” said Dave Fleming, global head of research and development for Mastercard Labs in Ireland. “If Ireland is affected, it will probably be similar to 2008 and the whole world might be affected so possibly blockchains might help.” The Irish will have to wait and see, he says.

Ireland’s hope

If Britain leaves without agreeing to terms on the border with Northern Ireland, a more strongly enforced border could partially isolate Ireland and reignite conflict. According to Anthony Day, chief operating officer of Deloitte’s EMEA Blockchain Lab in Ireland, Brexit brings to mind the concept of a “digital border” between Ireland and the U.K. As Day explained:

“We see significant potential for Blockchain to provide the capability to enable secure, real-time and automated infrastructure to support trade, reporting, and the movement of goods and people. However, establishing the relevant working groups, governance, deploying such platforms and completing the necessary transformation within both public and private sector organizations would be a multi-year initiative, and the timescale for Brexit is immediate.”

Brexit has dampened Irish consumer confidence and stymied foreign investment. Ireland’s biggest companies are drawing up backup plans in case of a no-deal Brexit. Business owners fear tariffs, customs paperwork and delayed shipments of goods from Britain. AIB, Ireland’s biggest bank, said this past Monday that one-third of companies have canceled or postponed investments because of Brexit.

“A Brexit ‘no deal’ is clearly the biggest concern,” said Raul Sinha, a banking analyst at JPMorgan Chase.

Cryptocurrency and Ireland

According to Day, blockchain is flourishing in Ireland. The exchange Coinbase, development company Consensys, and Wachsman PR have all opened offices in Dublin. Deloitte deliberately chose Dublin as the home for the EMEA Lab and invested in a dedicated facility.

Day notes that the Irish government has committed 500 million euros toward its Disruptive Technologies Innovation Fund. Through the fund, business and research groups can apply for funding to progress blockchain and other technologies.

“From a Blockchain perspective,” Day said, “we have seen strong engagement from across Ireland’s major sectors (Financial Services, Food & Agriculture, Technology, Aviation and others) in applying Blockchain to address established industry pain points such as transparency, data sharing, fraud and driving efficiency in trading activity.” Fleming also sees many big enterprises adopting blockchain:

“Well, as far as I can see, there is a massive uptake of crypto inside financial firms. From people I have talked to inside the industry, I’d say most firms, including the Big 4, as well as most of the banks located here, will be moving most of their verification methods to the blockchain within a few years. People from all over the tech sector are picking up crypto and figuring it out.”  

ConsenSys, which opened an office in Dublin last year, remains active in the city.

“What is surprising is the amount of blockchain activity taking place in Ireland,” ConsenSys Ireland MD Lory Kehoe told Cointelegraph. “While the blockchain eco-system is relatively new in Ireland we are seeing rapid development of the market here.”

Ireland's Blockchain Landscape

Kehoe cites working groups like Blockchain Ireland (BI), a group of government and private companies and individuals, as a big part of the development of the ecosystem there:

“Ireland has a number of fantastic third level programmes in computer science and also a talent center of thousands of people who have come to work for some of the major social and tech companies that have their EMEA headquarters here.”

He believes, however, more needs to be done to ensure that coding and developer education is introduced to the education cycle early.

“Business and government need to work together to equip Irish citizens with the skills they need to work in the economy of the future,” Kehoe said.

The government’s role

Jillian Godsil, co-founder of — who also works with Blockchain Ireland — and Kehoe both mentioned “exciting news” coming soon from Blockchain Ireland.

“The whole of Ireland will go crazy for Blockchain,” Godsil said.

The growth of the blockchain industry comes as tech and finance companies move to Dublin — many are coming from the U.K. ahead of Brexit. So, while throughout history the Irish have left their homeland to seek work, hundreds of U.K. businesses are already relocating to the Emerald Isle in order to keep operations based inside the EU, thus creating more jobs for those living in Ireland.

Barclays, Bank of America, CitiBank, Google, Facebook and more are all moving their EU headquarters to Ireland from London. Citibank and Bank of America have merged U.K.-based subsidiaries into Irish subsidiaries, bringing in billions worth of assets to the country.

Still, Brexit looms. It could decide whether Ireland’s boom continues or goes bust. In the words of Mastercard’s Fleming, we’ll have to wait and see.

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Irish Bitcoin Broker Claims Country’s Banks Are Closing Crypto-Related Accounts

The co-founder of Irish Bitcoin (BTC) broker Eircoin accused the Banking and Payments Federation of Ireland (BPFI) of discriminating against crypto-related accounts, The Irish Times reports June 21. Dave Fleming blamed the BPFI for, “seeking to muddy the waters with insinuations of dirty money.”

Eircoin, which is reportedly “Ireland’s only Bitcoin broker,” was closed in April. The firm’s co-founder Dave Fleming said they were “shuttered due to a negligent and defensive banking system”. According to Fleming and his business partner Roisin Coogan, banks also refused banking services to a new secondary consulting business.

Fleming claimed that the closing of the brokerage “reeked of regulatory capture,” which is entirely different from the “arms wide open attitude” of IDA Ireland. IDA Ireland is a state-sponsored agency responsible for attracting foreign investment to Ireland that recently led an initiative promoting blockchain development and investment in the country.

According to Fleming, banking and financial institutions should not be involved in the prosecution of illegal activities associated with crypto trading. Thus, they have no right to refuse firms that deal with cryptocurrencies.

“If any of the Bitcoin sellers in Ireland were involved in terrorist financing I’m sure it wouldn’t be a bank discussing it with us, it would be the law.”

The Irish banks, in turn, denied discriminating against crypto-related businesses. According to The Irish Times, the BPFI, which represents 70 financial institutions, stated that it was not aware of a policy that would allow banks to close the accounts of crypto-related businesses.

One of the leading Irish banks, AIB, also denied claims that it was refusing banking services to crypto-related firms. The bank argued that it “[doesn’t] discriminate in relation to providing banking services to cryptocurrency companies nor [has it] been systematically exiting such companies.”

However, the bank added that they are required to adhere to AML and know your customer (KYC) regulatory requirements for opening and operating bank accounts. According to AIB, some companies were unable to comply.

Banks in numerous countries have shut their doors to crypto businesses and exchanges. In May, Poland’s largest crypto exchange BitBay suspended its activities in the country because banks refused to offer them services. In April, the Reserve Bank of India announced that they will no longer service any person or business that deals with cryptocurrencies. Crypto exchanges in both Finland and Chile have risked total closure as the respective countries’ banks are unwilling to do business.

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Irish Bitcoin Brokers Accuse Local Banks of Cryptocurrency-based Discrimination

Bitcoin traders in Ireland claim local banks are systematically denying them access to banking services. This situation has resulted in the closure of some cryptocurrency trading firms while others have had to deal with offshore banks to remain in business.

Denial of Banking Services to Bitcoin Traders in Ireland

According to Irish Bitcoin brokers like Bitcove and Eircoin, banks in the country have made it a habit of closing the accounts of cryptocurrency trading companies. Thus, many startups have ceased operating in the country as the lack of access to banking facilities shuttered their businesses.

For Peter Nagle of Bitcove, one of such Bitcoin brokerage firms in Ireland, the situation is especially unpleasant given that the company was established on the back of a blockchain support initiative. Banks including the Bank of Ireland backed this blockchain support initiative. Commenting on the situation, the Bitcove co-founder said:

Particularly disappointing was Bank of Ireland. We were participants on the Ignite start-up programme, which is backed by the bank. Our business and its progress were reviewed monthly by a panel which included Bank of Ireland representatives. At the end of the incubator Bitcove won the award, but then just a few months later our accounts were frozen and eventually closed.

Recently, the firm’s accounts have been closed by both Bank of Ireland and AIB. Nagle shed some light on the reasons given by the banks for the account closures, saying:

The reasons cited have been that they do not support companies offering cryptocurrency exchange facilities despite the fact they had previously given us an account for this purpose.

Bitcove has since been forced to look overseas for banking partners that Nagle described as being “more progressive.” However, some other firms have shut their operations after what appears to discriminatory banking practices from lending institutions in the country. According to Dave Fleming, co-founder of Eircoin, another Ireland-based Bitcoin trading firm:

We are being shuttered due to a negligent and defensive banking system.

Banks Say they are Complying with KYC and AML Regulations

Responding to the allegations, both Bank of Ireland and AIB towed different lines. Bank of Ireland said in a statement that it does not offer services to cryptocurrency companies. However, the bank also said that there was no prohibition against its customers from engaging in the market.

As for AIB, it denied any knowledge of discrimination by banks against Bitcoin brokers. A spokesperson for the bank said:

We don’t discriminate in relation to providing banking services to cryptocurrency companies nor have we been systematically exiting such companies.

The spokesperson said that the bank had an obligation to adhere to the KYC and AML regulations of the country. According to the spokesperson, some cryptocurrency trading companies failed to comply with the laws.

As for Fleming, he believes the KYC and AML argument is an attempt delegitimize cryptocurrency trading in the country, saying:

If any of the bitcoin sellers in Ireland were involved in terrorist financing I’m sure it wouldn’t be a bank discussing it with us, it would be the law.

Ireland isn’t the only country where banks seem averse to cryptocurrency trading operations. In both India and Iran, the country’s central bank instructed regulated financial institutions not to facilitate virtual currency transactions. In Chile, banks closed the accounts of some crypto exchange platforms much to the chagrin of the cryptocurrency community in the country. A recent appeals court ruling overturned the policy.

Do you think Irish banks are discriminating against cryptocurrency traders in the country? Keep the conversation going in the comment section below.

Image courtesy of the Irish Times.


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MoneyConf Dublin Kicks Off Today with Crypto, Wall Street, Gov’t Speakers

Cointelegraph will be live-streaming crypto and fintech conference MoneyConf in Dublin, Ireland as the event’s official media partners starting today, June 12.

The conference – organized by the team behind annual tech conference Web Summit – includes speakers from across the crypto, blockchain, and fintech industries, including Ethereum (ETH) co-founder Joseph Lubin of Consensys, Square CFO Sarah Friar, and Overstock CEO Patrick Byrne.

From the cultural side, musician Imogen Heap, also founder of music blockchain ecosystem Mycelia, will lead a panel titled “Is all fair in music and blockchain?”

Today’s lineup kicks off with opening remarks from Paddy Cosgrave, the CEO of Web Summit. Opening remarks will be streamed live starting at 9:45am UTC+1.

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MoneyConf will cover topics ranging from the Asian cryptocurrency landscape, the relationship between Wall Street and the crypto sphere, and the implementation of blockchain to bring more decentralization to banking, finance, and asset management.

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DHL Announces Partnership With Global Blockchain Trade Finance Platform TradeIX

DHL is partnering with blockchain trade finance platform TradeIX, according to a presentation today, June 5, at the Money20/20 conference in Amsterdam.

Becky Taylor, Vice President of Commercial at DHL Supply Chain UK and Ireland, spoke about how the company has been looking to “create more efficient networks” through digitization, including a way to “serialize products to be able to track that product through its life.”

Taylor then announced the partnership by saying that DHL on its own “can’t achieve those types of funding rates to create an attractive price [for customers], so we started to work with Trade IX.”

Daniel Cotti, CFO of TradeIX, noted that the current lack of standards and interoperability in the trade finance market creates disconnected trade systems that rely on “manual, costly, tedious, error prone and redundant processes.”

According to the presentation, blockchain technology can power “leaner, more automated and error free processes and increased visibility.” TradeIX’s TIX platform will reportedly allow DHL to “embe[d] multiple funding and risk mitigation options into their product offering.”

This is not DHL’s first foray into blockchain tech – in mid-March, DHL and consulting firm Accenture announced they had jointly created a blockchain-based supply chain prototype for the pharmaceutical industry.

In mid-May, the CEO of delivery service FedEx said that blockchain is the “next frontier” for global supply chains.

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Visa Card Payments Failing in UK, Europe, Highlighting Need for Decentralized Options

Visa has said that their card payments are experiencing disruptions across Britain and Europe, the BBC reports today, June 1.

Visa, which handles over 150,000 mln transactions a day, tweeted about the service disruption, noting that they will keep updating as they resolve the situation:

In comparison, the Bitcoin’s (BTC) decentralized network has been functional 99.99 percent of the time since its inception on Jan. 3, 2009.

According to the Payment Systems Regulator, the problem is isolated to solely Visa card payments.

Barclays and the Bank of Ireland have told their customers to withdraw cash using ATMs.

Other banks including NatWest and HSBC tweeted about Visa problem, noting that Mastercard transactions are not affected:

According to the BBC, the supermarket chain Tesco has said that the Visa problem is affecting customers using contactless payment, but not those using chip and pin payment systems. Sainsbury’s has also noted it was seeing problems with Visa card payments.

However, card payment solution Paymentsense tweeted that Visa has “corrected the outage” and the current interruptions are due to a “backlog of transactions:”

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Light Shed on Cryptocurrency Taxation Rules: Ireland

Ireland officials have released the Tax and Duty Manual with the target to clarify the situation with taxation of crypto-related activities. The rules and description notes that standard regulations apply to the cryptoverse.

The Irish gov agency that deals with taxation and customs – The Irish Revenue Commissioners, highlighted that the manual published does not determine or cover any regulatory aspect while it can be used as a reference for taxes.

Following the document-walkthrough, capital gains, income and corporation tax are fitting but should be analyzed separate. In general, businesses accepting crypto payments for goods or services should keep records of crypto transactions.

Until now no new or special rules have been made public which results with taxable profits to be set under current tax legislation.

The profits and losses of a company transacting in cryptocurrency must be reflected in accounts and are taxable under “normal CT rules,” the document states. Ireland’s Taxes Consolidation Act from 1997 recognizes that some businesses operate and prepare their accounts in a “functional currency” other than euro.

According to the authorities, keeping in mind that cryptos are still not considered functional currencies, accounts that are setup for tax purposes are to be maintained with traditional currencies.

“Profits and losses of a non-incorporated business on cryptocurrency transactions must be reflected in their accounts and will be taxable on normal income tax rules,”

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Irish University Study Calls For Government Action To Promote Blockchain In The Country

The authors of a study at the National University of Ireland (NUI) Galway on the adoption of blockchain in Ireland, called on the government to promote the technology more broadly in the country, The Irish Times reported May 11.

The study proposes recommendations to increase blockchain awareness and adoption, that can reportedly have a positive impact on economic growth and establish a basis for how the government and Irish organizations carry out business.

Dr. Trevor Clohessy at NUI Galway, who led the research, called for government action to promote blockchain in Ireland through the development of a national initiative:

“…Beyond business, other beneficial uses of this technology would be in voting machines and ballot boxes to address electoral fraud and potentially looking at a blockchain enabled technology-controlled border identification system that could provide a possible solution to the current North/South Brexit border challenges.”

The study entitled “The adoption of Blockchain in Ireland: Examining the influence of organisational factors” was conducted by NUI Galway in partnership with the Blockchain Association of Ireland. The study examines factors that influence Irish companies in their decisions to adopt blockchain. The key findings show that only 40 percent of enterprises in Ireland have embraced the technology, which is a relatively low rate according to the researchers.

The study found that top factors affecting blockchain adoption were support from top management, organizational readiness, legislative uncertainty, and a lack of business cases and in-house expertise.

Ireland is 13th on the Bloomberg 2018 Innovation Index, with high scores in productivity and manufacturing value-added, and has advanced IT infrastructure. In recent years, Ireland has branded itself as a hub for fintech and blockchain business, touting a low corporate tax rate of 12.5 percent with a double taxation treaty network with 72 countries.

In a similar study polling financial executives globally, the Financial Executives Research Foundation found that 30 percent of financial executives “plan to commit resources to blockchain within the next year and a half…”

Last month, financial services provider Mastercard announced it will hire a wide range of professionals such as software engineers, data scientists, information security experts, and blockchain specialists in Dublin to boost innovation in the field of payments.

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Mastercard Ireland Looking For Blockchain Specialists Among 175 New Hires

Financial services provider Mastercard has recently announced it will hire 175 new employees in Dublin to increase its presence in Ireland. Among others, the company is looking for Blockchain specialists, local news outlet Irish Tech News reported April 12.

In order to boost innovation in the field of payments, the company is looking to hire a wide range of professionals such as software engineers, data scientists, information security experts and Blockchain specialists.

Ireland’s Minister for Business, Enterprise and Innovation, Heather Humphreys commented that the country has become “a very attractive location for international fintech and payment companies” stressing the favorable government policies as one of the causes.

“The Government has been working hard to ensure that we have the right conditions in place to attract the knowledge-based sectors to Ireland, in particular a skilled workforce that can fill the needs of companies like Mastercard. Ireland is now a very attractive location for international FinTech and payment companies from all over the world and announcements like this one today illustrate that our policies are continuing to deliver tangible results.”

In March, Mastercard said that it was open to the idea of state-issued digital currencies, one example of which is the Venezuelan oil-backed petro. In 2016, Mastercard filed a patent for instant credit card payments using Blockchain technology.

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Ireland's Finance Department Plans Blockchain Working Group

Ireland’s Department of Finance has proposed the creation of a new blockchain working group to help create cohesive regulation across government agencies.

Revealed in a new report, titled “Virtual Currencies And Blockchain Technology,” the working group would aim to help bring a coordinated approach to rules around cryptocurrencies and monitor developments in blockchain technology, “addressing considerations raised by consumers, industry, the EU, and governments worldwide.”

Elsewhere in the report, the finance department estimates that 6.3 percent of venture capital invested in the country from 2012 to 2016 went to Ireland-based blockchain businesses – a figure it says dwarfs the capital invested in such projects across the United Kingdom and Switzerland.

From supply chain experiments by the Irish Dairy Board to cryptocurrency startups, this growing sector has captured regulators’ attention.

The report’s authors urge lawmakers to provide clarity to consumers about what protections are available when transacting with virtual currencies, give entrepreneurs a clear regulatory framework, and “equip Ireland with a differentiating competitive advantage in securing foreign direct investment” in blockchain projects.

They go on to warn over criminal activity and volatility, but take an optimistic view, saying:

“Although criminality associated with virtual currencies represents a risk to governments, there is evidence to suggest that the majority of virtual currencies are purchased by investors and legitimate owners.”

The paper also suggests that blockchain technology could help boost efficiency and reliability across the financial sector, including securities settlements.

Dublin, Ireland image via Shutterstock

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