Public feedback on European Securities and Markets Authority crypto-asset guidelines due April 22

One concern raised by critics regarding such guidelines is the potential for "regulatory overreach," as the regulations may be viewed as overly burdensome, especially for smaller crypto-asset firms.

The draft guidelines aim to assess the knowledge and competence of individuals advising on or providing information about crypto-assets. They are part of broader efforts to regulate crypto-asset services in the European Union and were introduced in an ESMA consultation paper.

The guidelines are aimed at developing technical standards under the Markets in Crypto-Assets Regulation (MiCA) framework, requiring that crypto-asset service providers ensure their personnel possess the necessary expertise to meet regulatory obligations. 

Per the consultation paper, ESMA notes the reasoning for requiring new guidelines is due to the “the risk of potential detriment, especially for retail investors with exposure to crypto-assets, it is crucial that staff of crypto-asset service providers who give advice on crypto-assets or information about crypto-assets or crypto-asset services possess and also maintain, an appropriate level of knowledge and competence to fulfill their obligations set out under MiCA.” 

The draft guidelines stress the importance of professional qualifications, experience and continuous professional development (CPD) for staff in the crypto-asset service sector. 

Read more about the proposed guidelines below:

Draft Guideline 1

Draft Guideline 1 is aimed at ensuring crypto-asset service providers take adequate measures to ensure their staff, particularly those providing information or advice on crypto-assets, have the necessary knowledge and competence to meet their obligations under MiCA. 

It requires staff to understand and apply the internal policies and procedures designed to comply with MiCA and emphasizes that the management body should annually assess the effectiveness of these policies. 

This guideline also introduces a proportionality principle, stating that staff offering advice should have a higher level of expertise than those providing information. 

Additionally, it clarifies that these requirements apply to all staff, including those responsible for determining the content of information and advice, especially in automated or semi-automated service contexts.

Draft Guideline 2 

Draft Guideline 2 outlines the criteria for ensuring that staff providing information about crypto-assets or crypto-asset services have the necessary knowledge and competence, including an understanding of the key characteristics, risks and functioning of the crypto-asset markets. 

It sets minimum requirements for professional qualifications, experience and continuous CPD to ensure staff are adequately trained and remain up-to-date. 

This guideline also provides flexibility for crypto-asset service providers by offering several options for meeting these requirements and allows existing staff, who have demonstrated competence before the guidelines' implementation, to meet the necessary standards through ongoing training.

Draft Guideline 3 

Draft Guideline 3 specifies that staff giving advice on crypto-assets or crypto-asset services must meet the criteria outlined in Guideline 2 but require a deeper understanding of the characteristics, risks and market dynamics of crypto-assets, as well as portfolio management principles. 

It also sets minimum requirements for professional qualifications, experience and continuous professional development for such staff to ensure they remain knowledgeable and competent.

Draft Guideline 4 

Draft Guideline 4 outlines the organizational requirements for crypto-asset service providers to assess, maintain and update the knowledge and competence of staff providing information or advice on crypto-assets or crypto-asset services. 

Providers must ensure that staff meet appropriate qualifications, gain relevant experience and submit records of staff competence to the competent authority upon request.