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ESMA Launches Consultation to Define Crypto Advisor Standards Across Europe
The European Securities and Markets Authority (ESMA) has launched a public consultation to establish standardized guidelines for cryptocurrency advisors in the EU. The move aims to ensure investor protection, mitigate risks, and promote market integrity.
In its proposal, ESMA emphasizes that the rapid growth of the crypto market has introduced new challenges, particularly for retail investors. To address these concerns, the regulator is seeking feedback on proposed standards for financial service providers offering cryptocurrency-related services.
The consultation focuses on defining a baseline level of expertise for advisors, acknowledging the unique characteristics of blockchain-based assets and their inherent risks. The proposed guidelines closely align with existing MiFID II regulations but incorporate crypto-specific considerations to address these novel challenges.
Market participants, including Cryptocurrency Asset Service Providers (CASPs), investors, financial institutions, and industry associations are invited to submit their opinions on the proposal. ESMA will accept comments until April 22, 2025, and plans to release the final guidelines in the third quarter of this year.
The proposed standards aim to ensure that advisors possess a deep understanding of cryptocurrency markets and associated risks, as well as the capabilities to provide high-quality services to clients. The regulatory body is also seeking input on addressing issues such as:
1. Risk assessment and management for crypto-related investment products.
2. Clear communication of crypto-related services and their potential outcomes.
3. Appropriate measures to prevent conflicts of interest and maintain transparency.
By establishing a uniform set of standards, ESMA aims to enhance investor protection and promote confidence in the crypto market. The proposed regulations will not only benefit retail investors but also contribute to the overall stability and integrity of the European financial system.
As the consultation period is open, it’s crucial for industry stakeholders to engage and provide valuable feedback that can shape the future direction of crypto regulation in Europe.
Source: cryptoslate.com
