The European Securities and Markets Authority (ESMA) has initiated a consultation to set stringent knowledge and competence criteria for employees of crypto-asset service providers (CASPs). This effort aligns with the upcoming Markets in Crypto-Assets Regulation (MiCA) and aims to standardize qualifications, enhancing investor protection in a rapidly evolving market.
Proposed Guidelines for Employee Qualifications
The proposed guidelines outline clear knowledge requirements for staff who provide information about crypto-assets. Employees must demonstrate an understanding of the key characteristics and risks associated with these assets, including:
- Inherent volatility
- Potential cybersecurity vulnerabilities
- Risks of fraud
Additionally, familiarity with distributed ledger technology (DLT) and the mechanics of various blockchain protocols is essential. Understanding market structures that influence crypto-asset valuation, tax implications, and differences in investor protections under MiCA compared to traditional financial services regulations is also crucial.
Criteria for Information Providers and Advisors
To qualify as information providers, employees must meet specific criteria, such as completing at least 80 hours of training along with six months of supervised experience. Alternatively, having one year of supervised experience without formal qualifications is acceptable, contingent upon passing an assessment. Existing staff with a year of experience prior to the implementation of these guidelines will be allowed to continue in their roles without needing additional certification.
For those providing advice, the standards are even more rigorous. Advisors must not only meet the baseline knowledge requirements but also possess a solid understanding of portfolio management fundamentals. This includes diversification strategies and awareness of the total costs associated with investments in crypto-assets, such as trading fees and blockchain network costs.
Organizational Obligations for CASPs
In addition to individual employee requirements, the proposed guidelines outline several organizational obligations for CASPs. These include conducting annual internal reviews of employee qualifications, experience, and training to ensure compliance with regulatory standards. CASPs will also be required to maintain documentation and reporting obligations to demonstrate adherence to these guidelines.
Furthermore, supervision of inexperienced staff will be mandated for up to four years before they can operate independently. This ensures that new employees receive adequate support and guidance as they develop their expertise in the field.
Continuous Professional Development
To promote continuous professional development, employees will be required to complete ongoing training, with specific hours mandated based on their roles. Those providing information must complete at least 10 hours of continuing education annually, while advisors will need to complete a minimum of 20 hours.
Training programs will include assessments to verify knowledge retention, emphasizing the importance of staying informed in a market characterized by rapid changes and emerging risks. This ongoing education is crucial for maintaining high standards in the crypto-asset sector.
Stakeholder Engagement and Future Steps
ESMA has recognized the unique challenges posed by crypto-asset markets, including the potential for misinformation and the need for robust investor protection mechanisms. By establishing high standards for staff qualifications, the authority aims to enhance the overall integrity of the crypto-asset sector.
While acknowledging the potential compliance costs associated with these requirements, it argues that they align with existing obligations under MiCA. Stakeholders are encouraged to provide feedback on these proposals until April 22, 2025, and following the review of public comments, ESMA plans to publish the final guidelines in the third quarter of 2025.
📎 Related coverage from: financefeeds.com
