The first six months of the year have seen a number of interesting developments across the regulatory landscape in Ireland. These include the implementation of MiCAR, proposed updates to the Consumer Protection Code, and delays by the EU in adopting Basel III reforms through its adoption of the Capital Requirements Directive (CRD VI) and Capital Requirements Regulation (CRR III).

MiCAR
The Markets in Crypto Assets Regulation (MiCAR) is the European Union’s first regulation aimed at regulating the crypto asset sector. Its goals are to protect consumers and ensure the sector is well-governed.

For issuers of Asset Reference Tokens (ARTs) and E-Money Tokens (EMTs), MiCAR came into effect on 30 June 2024. EMTs and ARTs, also known as “Stablecoins”, are linked to an underlying asset – single official (or fiat) currencies for EMTs and multiple official currencies, commodities, or other crypto assets for ARTs.

For Crypto Asset Service Providers (CASPs), MiCAR will come into effect on 30 December 2024. CASPs are typically firms that provide trading platforms and exchange services for clients, many of whom will already be registered by the CBI under the Virtual Asset Service Provider (VASP) regime.

This regulation represents a considerable challenge for the sector, which now needs to be authorised similarly to mainstream financial services firms. They must establish a clear risk management framework and business models and, most importantly, effectively communicate consumer value and protection to the Central Bank of Ireland (CBI).

Firms currently registered as VASPs, or registered before 30 December 2024, will be able to continue operating until 30 December 2025.
Any CBI application for an authorisation will need to be robust and can take significant resources and take months to complete. Firms should start planning for the application process early. In addition, it is anticipated that there will be a high number of CASP license applications, so the earlier firms can start the internal process, the better.

Enria report
One unexpected development was the Irish Financial Services Appeals Tribunal’s (IFSAT) decision against the CBI, which was critical in a number of aspects of the CBI Fitness and Probity interview and decision-making process in February this year.

Following this, the CBI tasked Andrea Enria, a former chair of the European Banking Authority, to review the current Fitness and Probity process.
While confirming that the Fitness and Probity assessment was broadly aligned with peers, the Enria report made 12 recommendations, which the CBI has confirmed will be in place before the end of the year. These include greater clarity on interview content, more senior staff involvement, and clearer agendas for Fitness and Probity interviews.

Consumer Protection Code
The CBI is currently conducting a comprehensive review of its Consumer Protection Code (CPC or Code). The goal is to update and modernise the Code to secure customers’ interests and deliver positive consumer outcomes. The review aims to:
• Ensure firms effectively incorporate customers’ interests into their strategy and decision-making.
• Provide clarity for firms on their consumer protection obligations.
• Support consumers and firms in accessing and navigating the Consumer Protection Code through online supports, guides and explainers.

The CBI expects to publish the revised Code in early 2025, with implementation scheduled for 2025/2026.

Delay in implementation of Basel III in the European Union
In June 2024, the EU announced its decision to delay implementing key provisions of the Basel III framework, known in the EU as the CRR III / CRD VI package. These reforms aim to ensure EU banks become more resilient to future economic shocks and cope with current economic factors, such as COVID-19 recovery and climate goals.

Originally planned for early 2025, the implementation of these reforms has been postponed to January 2026. These reforms concern how banks manage market risks in their trading books, known as the fundamental review of the trading book (FRTB).

Motor finance
On 12 June 2024, the CBI issued a Dear CEO Letter to retail credit firms providing motor finance to consumers through intermediaries or dealer networks. This letter requires retail credit firms to cease discretionary commission arrangements as soon as possible but no later than 31 July 2024.

The CBI defines a discretionary commission arrangement as an arrangement whereby a firm or product producer allows a credit intermediary to select the interest rate charged to the consumer and where the commission paid to the credit intermediary by the firm is linked, either wholly or partially, to the interest rate charged. The CBI has stated in the Dear CEO letter that incentives created for credit intermediaries to apply a higher interest rate in order to increase the amount of commission received, is not consistent with the Consumer Protection Code (CPC).

By 5 July 2024, retail credit firms are required to confirm to the CBI Board that they will cease any such arrangement and specify the cessation date. They are also required to confirm that they will complete a review of their disclosure of commission arrangements to consumers in accordance with both current and proposed Consumer Protection Code requirements. Any resultant changes to documentation must be made by 30 August 2024 and the outcome of the review must be provided to the CBI by the 30 September 2024.