ESMA’s Bold Move: Are Crypto Advisors Finally Getting Their Act Together? 🤔💰

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In the grand tapestry of human endeavor, where the threads of ambition and folly intertwine, the European Securities and Markets Authority, a body of considerable gravitas, has embarked upon a noble quest. They seek the wisdom of the public, a collective voice, on the proposed standards of knowledge and competency for those who dare to navigate the tumultuous waters of crypto service provision.

On a fateful day, the 17th of February, a consultation paper emerged from the depths of bureaucratic deliberation, laying forth a series of new edicts. These rules, akin to the commandments of old, demand that crypto service providers ensure their staff are not merely charlatans, but rather, individuals of substantial qualification and training, capable of imparting advice or information on the enigmatic realm of crypto assets to the unsuspecting public.

With this initiative, the regulator aspires to establish a minimum threshold of knowledge and competence among those who would offer counsel, thereby fortifying the bastions of investor protection and nurturing a fragile trust within the crypto markets, all under the auspices of the European Union’s Markets in Crypto-Assets regulation. A noble endeavor indeed, though one might wonder if it is akin to teaching a cat to fetch.

According to the proposed rules, crypto firms must ensure their staff meet these lofty knowledge standards. Advisors, those brave souls who would dare to guide others, are required to possess formal education, undergo supervised experience, and triumph in an assessment before they can dispense their wisdom. One can only imagine the scene: a room full of advisors, sweating profusely as they prepare for the great knowledge gauntlet.

Those who merely provide general information must endure at least 80 hours of training and six months of supervised experience, while advisors must possess a three-year degree or its equivalent. Furthermore, these diligent workers must submit themselves to annual competency reviews and ongoing professional development, with 10 hours of training for information providers and a staggering 20 hours for advisors. Truly, a Herculean task for those who might have thought that merely Googling answers sufficed.

Moreover, crypto service providers would be mandated to document the qualifications of their staff, regularly assess the effectiveness of their training, and ensure that even their automated advisory services adhere to these standards. New hires, those fresh-faced neophytes without the requisite qualifications, would be permitted to toil under supervision for a maximum of four years—an eternity in the fast-paced world of crypto, where yesterday’s news is but a distant memory.

In light of the “volatility of many crypto-assets,” the incessant birth of new assets, and the “limited knowledge of market participants, especially retail investors,” the regulator deems knowledgeable and competent service providers as essential to ensuring that clients receive “appropriate levels of knowledge and competence.” One might chuckle at the irony of it all, as firms are urged to act in the best interests of clients, a notion that seems almost quaint in the cutthroat world of finance.

Those with a vested interest in this matter have until the 22nd of April, 2025, to voice their opinions on these proposed guidelines. The ESMA, in its infinite wisdom, is expected to finalize the rules in the third quarter of 2025, with the new requirements anticipated to take effect a mere 60 days after their publication in all official EU languages. A timeline that surely inspires confidence, or perhaps a hearty laugh.

This consultation paper arrives at a time when crypto companies are fervently seeking MiCA licenses, heralding the European Union’s inaugural comprehensive regulatory framework for this burgeoning sector. Several firms have already basked in the glow of approval as member states dutifully implement the regulation’s requirements, a scene reminiscent of a race where the slowest tortoise finally crosses the finish line.

Just last month, the Singapore-based Crypto.com, in a display of remarkable agility, secured a MiCA license in Malta, mere days after receiving provisional approval. On that very day, Bitpanda, not to be outdone, obtained its MiCA license from Germany’s Federal Financial Supervisory Authority. One can only imagine the celebratory dances that ensued, perhaps accompanied by a few awkward high-fives.

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2025-02-18 11:28