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ESMA Seeks Your Input: Help Shape the Future of Crypto Advisor Standards Across Europe!

February 19, 2025
Smart Money

ESMA Launches Public Consultation to Establish Standards for Crypto Advisors Across Europe

February 17, 2025 – The European Securities and Markets Authority (ESMA) has initiated a public consultation aimed at establishing guidelines for the qualifications and competencies of professionals who provide crypto-asset services within the framework of the Markets in Crypto-Assets Regulation (MiCA).

Objective of the Consultation

The consultation, made public on February 17, 2025, seeks to create uniformity in the standards required for individuals advising clients on or disseminating information about digital assets. With the rapid growth of the cryptocurrency market, ESMA recognizes the need for enhanced professionalism and client protection throughout the European Union.

Minimum Competency Standards Defined

The draft guidelines introduced during the consultation outline specific criteria that professionals must meet to ensure they possess the necessary qualifications and experience for providing crypto-asset services.

Key proposed standards include:

  • For Investment Advisors: Advisors offering investment guidance on crypto-assets would be required to have a tertiary education degree or an equivalent qualification. They must also complete a minimum of 160 hours of professional training and possess at least one year of relevant work experience.
  • For General Information Providers: Those providing basic informational services must hold a professional qualification that includes at least 80 hours of training and six months of supervised experience.

All professionals in the sector are expected to pass an assessment exam and complete ongoing training. Specifically, information providers must engage in at least 10 hours of continuing education annually, while investment advisors will need to undertake at least 20 hours each year to keep their skills and knowledge current.

Understanding Crypto-Specific Risks

The guidelines stress the necessity for crypto advisors to be well-versed in the unique risks associated with digital assets, including:

  • Market volatility
  • Cybersecurity threats
  • Blockchain governance issues
  • Liquidity risks related to major asset holders

Furthermore, ESMA proposes that firms carrying out crypto-related services conduct annual internal reviews to ensure staff compliance with these outlined standards.

Broader Regulatory Context

This consultation coincides with the implementation of MiCA, which aims to create a cohesive legal framework for the cryptocurrency landscape across the EU. The full enforcement of this regulation is anticipated by 2025. MiCA seeks to enhance transparency, protect investors, and provide regulatory oversight for crypto-asset services.

ESMA has acknowledged that the rapid growth of the cryptocurrency sector has intensified risks, particularly for retail investors. The agency emphasizes that maintaining a baseline level of expertise among service providers is critical for ensuring investor protection and the integrity of the market.

Invitation for Public Feedback

Market stakeholders, including crypto-asset service providers (CASPs), investors, financial institutions, and industry associations, are invited to share their feedback on the proposed standards. ESMA will accept comments until April 22, 2025, with plans to publish the final guidelines in the third quarter of the year.

This consultation represents a significant step towards establishing a robust regulatory framework that addresses the complexities and risks inherent in the crypto-assets sector while ensuring better protection for investors in the evolving financial landscape.