He said: "My view is that the claimed benefits of ‘unbacked crypto’ should be treated with a large dose of scepticism.  The purchase of such products can be similar to purchasing a lottery ticket: you might win but you probably won’t.  And describing it as 'investment' is, needless to say, an abuse of the word; 'Ponzi schemes' might be more accurate."

The Governor expressed concern about advertising of crypto, saying the Bank is worried at the potential for consumer harm and discouraged marketing of cryptocurrencies to the public. He added that a particular concern for him was "aggressive advertising – which is sometimes false or misleading – through the use of 'influencers' to promote crypto while not disclosing the fact they are being paid."

He suggested that the crypto market "should be treated no differently to other financial markets with similar rules on the treatment of client funds, and on disclosures, governance, risk management and information exchange."  The vulnerabilities need to be "managed in a timely way" and "we will work with colleagues across the EU and at global fora such as the Financial Stability Board to ensure a rigorous regime that promotes a level playing field and avoids regulatory arbitrage in the interests of the community at large."

The Central Bank again emphasised that cryptoassets are highly risky and speculative, and may not be suitable for retail customers. In particular people need to be alert to the risks of misleading advertisements, particularly on social media, where influencers are being paid to advertise cryptoassets.

She said that, in theory, stablecoins have the potential to make international payments cheaper and faster and could foster greater financial inclusion. However, from a stability and regulatory perspective, they raise a host of issues in respect of the operational stability of payments systems, the protection of consumers and their data, anti-money laundering and terrorism financing, and critically to financial and monetary stability.

It also includes an overview of virtual currencies and the blockchain technology supporting them, summarising the actions taken by various countries around the world in respect of virtual currencies, as well as the key risks and opportunities for consumers and organisations.

One notable proposal is the creation of a working group to co-ordinate the approach to virtual currencies and monitor developments in blockchain technology, "addressing considerations raised by consumers, industry, the EU, and governments worldwide".

The working group will:

• Monitor developments at European (i.e. European Central Bank, European Banking Authority, European Securities and Markets Authority, European Commission, European Insurance and Occupational Pensions Authority) and global level (i.e. Organisation for Economic Co-operation and Development, International Monetary Fund) in relation to virtual currencies and blockchain and provide input into the discussions as and when required.
• Maintain up to date knowledge of developments to identify risks and assess potential economic opportunities for Ireland.
• Engage with industry and subject matter experts in the private and professional sectors to build a dynamic communication flow.
• Liaise with other areas of government to assess where involvement might be required.
• Consider whether suitable policy recommendations are required.
• Assist in promoting a better understanding of the area covered by the paper, across government.

The paper states that Ireland is already home to a number of blockchain businesses, some of which have attracted venture capital.

It also acknowledges that blockchain presents an opportunity to help deliver the country's IFS 2020 objectives by fostering growth in the technology sector, while supporting local companies and helping to attract foreign investments.

Previously, the Central Bank of Ireland issued alerts on initial coins offerings and, in February this year, it also issued warnings to consumers and investors regarding the risks of investing in virtual currencies.

With the release of the report, it now appears that Ireland is recognising that there is an opportunity for the country in the blockchain area and that government support will be vital to further the country's ambition to create an open and reliable blockchain ecosystem.

The Minister for Finance and Public Expenditure & Reform, Paschal Donohoe T.D, said:

“The Government’s IFS2020 vision is to be recognised as a global location of choice for specialist international financial services by building on our strengths in talent, technology, innovation and excellent client services, while focussing on capturing new opportunities in a changing marketplace and embracing the highest standards of governance. By engaging with virtual currencies and blockchain technology, Ireland, through the work undertaken by the Department of Finance, can be instrumental in creating a predictable and open blockchain ecosystem in Ireland and furthering that ambition.”

The CBI said that investors should be aware that they are exposed to the following risks when investing in ICOs:

• Unregulated activity, vulnerable to fraud or illicit activities.
• High risk of losing all invested capital.
• Lack of exit options and extreme price volatility.
• Inadequate information.
• Flaws in the technology.