The European Securities and Markets Authority (ESMA) is inviting public feedback on newly proposed knowledge and competency standards for crypto service providers. The regulator outlined these standards in a consultation paper released on February 17, aiming to enhance investor protection and foster trust within the crypto market under the European Union’s Markets in Crypto-Assets (MiCA) regulation.
Ensuring Qualified Crypto Advisors
Under the proposed framework, crypto firms will be required to ensure their staff possesses the necessary qualifications and training to provide accurate advice and information to the public. The objective is to establish a minimum level of competency for employees in advisory roles, ensuring they meet professional standards before engaging with investors.
To achieve this, ESMA has set forth specific requirements:
- Information providers must undergo at least 80 hours of training and acquire six months of supervised experience before engaging with clients.
- Advisors must hold a three-year degree or equivalent experience, coupled with supervised work before providing investment advice.
- Annual competency reviews and continuous professional development will be mandatory, with 10 hours of training for information providers and 20 hours for advisors each year.
Strengthening Supervision and Compliance
In addition to individual competency, ESMA’s proposal mandates crypto firms to maintain detailed records of staff qualifications, assess training effectiveness, and ensure compliance with these standards. Automated advisory services must also align with the competency requirements to safeguard investors from misleading or inaccurate advice.
New hires who do not meet the required qualifications will be allowed to work under strict supervision for a maximum of four years before they must demonstrate full competency.
Aiming for Market Stability and Investor Trust
ESMA’s initiative is part of the EU’s broader effort to create a regulated and transparent crypto environment, ensuring service providers are held to the same standards as traditional financial institutions. By requiring firms to regularly assess staff training and advisory practices, the authority aims to mitigate risks associated with misinformation and unqualified advice.
The public consultation period provides stakeholders with an opportunity to contribute their views on the proposed standards before they are finalized. Industry participants, regulatory bodies, and investors are encouraged to submit feedback on how these measures might shape the future of crypto service regulation in the EU.
