ESMA Launches Consultation on Crypto-Asset Service Standards
The European Securities and Markets Authority (ESMA) has initiated a public consultation to establish guidelines for evaluating the knowledge and competence of professionals offering crypto-asset services under the Markets in Crypto-Assets Regulation (MiCA).
Standardizing Qualifications
- ESMA’s consultation, released on Feb. 17, aims to set uniform standards for the qualifications and experience required for individuals providing advice on digital assets.
Minimum Competency Requirements
The draft guidelines define specific criteria for professional qualifications, work experience, and continuous education for staff working at crypto-asset service providers (CASPs).
Stricter Requirements for Advisors
- Advisors offering investment guidance on crypto-assets must meet more rigorous competency requirements compared to those providing basic information services.
ESMA specifies that advisors need to possess a tertiary education degree or equivalent, complete a minimum of 160 hours of professional training, and have at least one year of relevant experience. On the other hand, individuals offering general information on crypto-assets should have a professional qualification of at least 80 hours and six months of supervised experience.
All professionals are required to take an assessment exam and engage in continuous training, with information providers needing a minimum of 10 hours annually and advisors requiring 20 hours to keep their knowledge current.
Understanding Crypto-Specific Risks
- ESMA highlights the importance of comprehending risks unique to crypto-assets, such as market volatility, cybersecurity threats, blockchain governance, and liquidity risks associated with major asset holders.
Regulatory Implications
The consultation aligns with the implementation of MiCA’s regulations governing crypto-asset services in the EU, with full adoption expected by 2025. The regulation aims to create a consistent legal framework for digital assets, focusing on transparency, investor protection, and prudential oversight.
ESMA emphasizes the necessity for higher operational standards in the growing crypto industry to safeguard investors.
“The rapid expansion of crypto markets has increased risks, particularly for retail investors. Ensuring that service providers maintain a baseline level of expertise is crucial for investor protection and market integrity.”
The guidelines draw inspiration from existing MiFID II rules but introduce crypto-specific considerations to address the unique nature of blockchain-based assets.
Market participants, including CASPs, investors, financial institutions, and industry associations, are encouraged to provide feedback on the proposed standards.
ESMA will be accepting comments until April 22, 2025, and anticipates releasing the final guidelines in the third quarter of the same year.
