Bitcoin sector is angry at EI over funding stance

Enterprise Ireland criticised over its refusal to support bitcoin-style investment drives, writes Simon Rowe

ENTERPRISE Ireland’s refusal to support bitcoin-style funding drives by Irish fintech firms has drawn criticism from the sector.

“It’s a case of two steps forward and three steps backwards,” said Reuben Godfrey, co-founder of the Irish Blockchain Association, in response to Enterprise Ireland’s decision. “Flirting with cryptocurrency firms is all very well, but it looks like EI doesn’t want a second date,” said Godfrey.

Enterprise Ireland has clarified its position on Initial Coin Offerings (ICOs) after two Irish fintech firms that are in an EI start-up programme had been ordered to remove website information and amend details in an investment prospectus that appeared to suggest that the State agency endorsed the firms’ bitcoin-style funding drives worth €2.5m.

ICOs are typically used by start-ups to bypass regulated venture capitalists and banks.

“Enterprise Ireland is not in a position to support ICOs at present, in line with the views expressed by many international regulators and agencies. EI is not associated with any ICO fundraising currently,” said Eoin Fitzgerald, its senior development adviser of fintech.

Cryptocurrency firm MingoCoin — which is chaired by former Baltimore Technologies chief Fran Rooney and cites One Direction star Niall Horan as a shareholder and brand ambassador — sought to raise €2m in a token pre-sale, which ended on October 9. The pre-sale raised over €650,000 in the first hour alone.

A second Irish-based bitcoin start-up, Confideal, which has already raised about €550,000 in a pre-sale and launched an ICO this week, was also ordered by Enterprise Ireland to remove website material that gave the impression that the State agency was a partner to the ICO.

In response to Enterprise Ireland’s policy decision, the Irish Blockchain Association organised a conference to promote public dialogue about bitcoin and ICOs.

Godfrey is concerned that Ireland’s fintech sector will suffer as a result of the EI decision.

“Those jurisdictions that have given guidance and regulation around cryptocurrency are succeeding in attracting investment and innovation,” he said.

“Ireland has been innovative in how we developed our relationships with major tech firms and we have an opportunity now to prove again that we can be ahead of the crowd.”

The Central Bank has said it is examining the potential risks posed by virtual currencies. ICOs currently fall outside the scope of Irish law.

China and South Korea have banned ICOs and the UK’s financial watchdog, the FCA, has cautioned investors and consumers.

Peter Oakes, a former director of enforcement at the Central Bank, believes that the lack of disclosure about the risks of investing in ICOs, including the loss of the entire amount invested, is not being explained clearly to Irish investors.

With bitcoin popularity taking hold in Ireland, and with investment in ICOs worldwide estimated at €2.4bn, Oakes said: “No wonder firms and investors are jumping on the bandwagon. And no wonder some regulators are finally catching up.”