The European Securities and Markets Authority (ESMA) has issued new guidance that aims to harmonize compliance with its new crypto rules and guard against regulatory arbitrage.
On Friday, the regulator published new supervisory guidance that is intended to promote convergence in the application of its new crypto regime, known as the Markets in Crypto Assets Regulation (MiCA), by regulators.
Among other things, the guidance sets out to clarify the regulator’s expectations for implementing MiCA and to translate these expectations into “concrete supervisory practices” to ensure compliance harmonization.
The guidance covers governance expectations for crypto platforms, outsourcing, personnel suitability and ensuring that the top management of crypto firms can “demonstrate effective technical knowledge of the crypto ecosystem.”
It also sets out the risk factors that regulators should consider in their approach to approving crypto platforms and determining when a platform should face elevated scrutiny from regulators.
For instance, the guidance says that platforms with larger client and asset bases create a higher risk. Other factors include corporate complexity, the volume of cross-border activity and platforms’ role in crypto sector.
“Trading platforms and custody providers which provide services to other [platforms] or that could otherwise be reasonably expected to create wider market fallout in case of issues should be subjected to an elevated level of scrutiny,” ESMA said.
Additionally, platforms that offer a large number of services, or with novel business models, could represent a higher risk level, the regulator said.
aHR0cHM6Ly93d3cuaW52ZXN0bWVudGV4ZWN1dGl2ZS5jb20vbmV3cy9mcm9tLXRoZS1yZWd1bGF0b3JzL2VzbWEtaXNzdWVzLWNyeXB0by1ndWlkYW5jZS8(U2NyZWVuSGVpZ2h0)NzIw(U2NyZWVuV2lkdGg)MTI4MA(T0ZTWVNfUmVmZXJyZXI)(dmlzaXRvcktleQ)S0djYWlCRkM(dmlzaXRLZXk)ZVZTZnk2dTc){kind=small}