4.8 Crypto Assets

4.8 Crypto-assets

The tokenisation of payments has been an emerging feature of the payments landscape in Ireland and Europe in recent years, which has been spurred by the development of distributed ledger technology (DLT). Accordingly, the NPS seeks to establish a greater level of understanding around crypto assets and explore their use as a form of payment. Although crypto assets are a form of digital payment, their relative novelty in comparison to other more established means of digital payment (card, credit transfer etc.), as well as the emerging legislative framework arising around crypto, means that they have not yet gained widespread use.

Crypto-assets[1] (often referred to as stablecoins or crypto currencies) can be used for both payment and investment purposes. The Markets in Crypto Assets Regulation (MICAR), which entered into force on 9 June 2023 sets out a new regulatory framework for crypto-assets. Specifically, MICAR sets out the regulatory requirements for various forms of crypto assets, including EMTs (E-Money Tokens) and ARTs (Asset Reference Tokens) and utility tokens. Under MICAR, an ART “means a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies”, whereas EMTs are based on a single currency as the underlying asset. (defined by MICAR as a type of crypto-asset that is only intended to provide access to a good or a service supplied by its issue).

The ECB has also implemented the PISA framework (a Eurosystem oversight framework for certain payment entities and instruments), which defines digital payment tokens as:

“A digital representation of value backed by claims or assets denominated in euro or redeemable in euro, or referring to other digital assets that are accepted under the rules of an electronic payment instrument scheme for payment purposes or to discharge payment obligations in euro, and which enables the transfer of value between end users.”

While crypto assets may not currently be a common payments mechanism, it is important that the NPS assesses the role of crypto assets in the Irish payments landscape.