The European Securities and Markets Authority (ESMA) is currently seeking public feedback on proposed knowledge and competency standards for crypto service providers. This move comes as part of efforts to enhance investor protection measures and build trust within the crypto markets under the European Union’s Markets in Crypto-Assets regulation.
According to a consultation paper released on February 17, ESMA is pushing for new rules that would require crypto service providers to ensure that their staff possess the necessary qualifications and training to provide advice or information on crypto assets to the public. The aim is to establish a minimum level of knowledge and competence among staff members offering advice and information in the crypto space.
Under the proposed guidelines, crypto firms would be mandated to ensure that their staff meet specific knowledge standards. Advisors would need to have formal education, supervised experience, and pass an assessment before they can provide advice. Those offering general information would be required to complete at least 80 hours of training and six months of supervised experience. Advisors, on the other hand, would need to have a three-year degree or equivalent experience. Additionally, staff members would have to undergo annual competency reviews and engage in ongoing professional development, with information providers needing 10 hours of training and advisors requiring 20 hours.
Furthermore, crypto service providers would be obligated to document staff qualifications, regularly assess the effectiveness of training programs, and ensure that automated advisory services comply with these standards. New hires without the necessary qualifications would only be allowed to work under supervision for a maximum of four years.
ESMA highlights the importance of knowledgeable and competent service providers in light of the volatility of many crypto assets, the continuous introduction of new assets, and the limited knowledge of market participants, particularly retail investors. By ensuring that clients receive appropriate levels of knowledge and competence, firms can act in the best interests of their clients.
Interested parties have until April 22, 2025, to provide feedback on the proposed guidelines. ESMA is expected to finalize the rules in the third quarter of 2025, with the new requirements set to take effect 60 days after publication in all official EU languages.
This consultation paper comes at a time when crypto companies are pursuing MiCA licenses, which represent the EU’s first comprehensive regulatory framework for the sector. Several firms have already obtained approval as member states implement the regulation’s requirements. For instance, Crypto.com recently secured a MiCA license in Malta, while Bitpanda obtained its MiCA license from Germany’s Federal Financial Supervisory Authority.
Overall, the proposed knowledge and competency standards aim to elevate the professionalism and expertise of staff members within the crypto industry, ultimately enhancing investor protection and fostering trust in the market. Stay tuned for further updates as ESMA moves forward with finalizing these guidelines.