The European Securities and Markets Authority (ESMA) is tightening the reins on the crypto sector, proposing new guidelines that would set mandatory knowledge and competence requirements for staff at crypto asset service providers. As Europe’s regulatory grip strengthens under the Markets in Crypto-Assets Regulation (MiCA), this proposal could reshape how crypto firms hire, train, and operate.
Why This Matters: Raising the Bar for Crypto Expertise
On February 17, ESMA released a consultation paper aimed at setting clear standards for individuals providing advice or information on crypto assets and related services. The proposal emphasizes the need for crypto service providers to ensure their staff possess essential expertise in blockchain technology, crypto markets, risk assessment, and financial regulations.
Under the new framework, employees must demonstrate an in-depth understanding of key crypto asset features, market functions, pricing mechanisms, and associated risks especially for highly volatile assets. The regulator also stresses the importance of staff knowing tax implications and compliance obligations under MiCA.
“Particular care should be taken when giving information with respect to risks related to crypto-assets characterized by higher levels of complexity and volatility,” the proposal states, signaling the EU’s intent to protect investors in an unpredictable market.
Mandatory Qualifications and Ongoing Training
Beyond basic knowledge, ESMA’s proposed guidelines require:
- Minimum qualifications such as prior experience, formal education in finance, economics, or blockchain-related fields.
- Ongoing professional development to ensure that staff remain updated on regulatory changes and evolving market conditions.
- Annual competence reviews conducted by crypto service providers to assess staff qualifications and training needs.
- Supervision of unqualified staff and regular assessments to track knowledge improvements.
These measures could create significant compliance challenges for crypto companies, particularly smaller firms that may struggle with resource allocation for continuous training.
What’s Next: The Road to Implementation
The consultation period remains open until April 22, giving industry players a chance to weigh in on the proposed rules and suggest alternatives. ESMA expects to finalize the guidelines in Q3 2024, setting the stage for a more structured regulatory framework.
As MiCA’s full implementation nears, major crypto exchanges such as OKX, Crypto.com, and Bybit are already securing licenses to ensure their operations align with the EU’s stringent requirements. Meanwhile, compliance challenges continue to emerge, particularly around non-MiCA-compliant stablecoins like Tether’s USDT, which has faced delistings in Europe due to regulatory concerns.
The Bigger Picture: A Global Shift Toward Stricter Crypto Regulations?
Europe’s regulatory tightening under MiCA could influence other jurisdictions to adopt similar approaches. As investor protection becomes a focal point, stricter qualification standards for crypto professionals might soon become the norm worldwide.
For crypto firms, the message is clear: the era of loosely regulated advisory services is ending. The companies that adapt quickly to these new requirements will likely gain credibility and trust, while those that fail to comply risk falling behind in an increasingly regulated market.
With final guidelines expected later this year, the crypto industry must prepare for a new reality where regulatory knowledge and professional competence become as crucial as innovation and market strategy.
