The European Securities and Markets Authority has made a big move to strengthen crypto asset service rules. As part of the Markets in Crypto-Assets Regulation, ESMA started a public consultation on February 17 about new rules for testing the knowledge and skills of professionals who give crypto asset services. These rules aim to ensure that professionals who provide advice or information on digital assets meet consistent standards for their education and experience. These rules could affect the future of digital money in Europe as more people use cryptocurrencies.
Standardizing Qualifications for Crypto Asset Professionals
The draft rules from ESMA set strict requirements for people who work for crypto asset service providers. People who want to give investment advice on digital assets will need at least a bachelors degree or the equivalent, 160 hours of professional training, and one year of work in the field. Also, people who give general information about crypto assets must undergo 80 hours of professional training and six months of supervised practice.
Addressing Crypto-Specific Risks
A critical part of ESMA’s rules is ensuring workers know the specific risks of digital assets. Among these risks are:
- The market is unstable, which can cause significant cash losses.
- Cybersecurity threats include theft and hacking.
- Issues with blockchain governance include forks and updates to the system.
- Liquidity risks, especially for people who own a lot of assets.
ESMA wants to protect investors and make the market more stable by teaching experts much about risk.
Mandatory Compliance and Internal Reviews
ESMA requires companies to conduct annual internal reviews to assess how well employees are following these rules. This will help CASPs ensure that their employees keep up with regulatory standards and give reliable financial advice.
Industry Feedback and Next Steps
ESMA wants market users, CASPs, financial institutions, and investors to give their thoughts on these possible rules. The time for comments will end on April 22, 2025, and the final rules should be out in the third quarter of that year.
Conclusion
These rules are an essential step forward in regulating crypto assets. Now, people in the industry can help shape the future of crypto asset services, making the digital financial environment safer and more open.
