ESMA Consultation - Knowledge and Competence of CASP Staff
ESMA recently published a consultation paper on the criteria for assessing the knowledge and competence of Crypto-Asset Service Providers' ("CASPs") staff giving information or advice on crypto-asset services. Whilst publishing draft guidelines, feedback is being sought in relation to the (i) minimum required knowledge and competence; and (ii) organisational requirements for assessing, maintaining, and updating the knowledge and competence of the staff providing information or advice.
The guidelines are being published by virtue of the mandate issued under the Markets in Crypto-Assets Regulation (MiCAR). The mandate enhances investor protection by establishing standards that have to be met when giving such advice, whilst requiring CASPs to assist competent authorities when assessing the CASP's compliance with the established standards.
Relevant CASPs are expected to have in place internal policies and procedures reflecting MiCAR's mandate on the appropriate knowledge and competence which staff should be familiar with. Additionally, such CASPs are expected to assess and review the internal framework enforcing such mandate on an annual basis.
CASPs shall ensure that they employ staff, in accordance with the proposed guidelines, who are competent in effectively guiding clients. Effective guidance shall comprise of a comprehensive understanding of key characteristics, risks, and features of crypto-asset services, the underlying Distributed Ledger Technology ("DLT"), and the impact of different protocols on transactions. Additionally, the staff are expected to be knowledgeable on tax implications, transaction costs, and fee structures including those incurred through DLT networks.
Economic events, regulatory changes, and global financial trends are considered to be of significant importance, as they strongly impact the valuation and stability of crypto-assets. This all being said in light of the expectance that staff are to understand and be familiar with MiCAR itself, the Markets in Financial Instruments Directive (MiFID II), and other related provisions such as those related to anti-money laundering and terrorist financing.
From a more technical perspective the staff are expected to be able to analyse relevant financial data, interpret white papers, assess the structures, valuation mechanisms, and crypto-asset related security risks. In this regard, the draft guidelines establish qualification and experience requirements which have to be obtained by the staff prior to providing information. As of the date of this article, a staff member providing information and advice services on a full-time basis for a minimum period of 1 year is deemed to be a competent person.
Moreover, the draft guidelines establish continuous professional development or training ("CPD") requirements on CASPs in efforts to keep their staff proactive. The hours of CPD shall be determined based on the nature of the crypto-asset services provided and the existing knowledge of the staff member; however, every staff member shall be required to undergo a minimum of 10 hours of CPD per year. CPD may be delivered by either external professional education bodies offering recognised qualifications – a list of which is to be published by the competent authority, or through internally arranged CPD programmes. Nonetheless, irrelevant of the method of carrying out CPD, the draft guidelines impose an examination post-CPD assessing the knowledge and competence of the member.
The competent authority shall have the ability to request records relating to the knowledge and competence of staff providing relevant services to clients.
ESMA shall consider all submitted responses received by the 22nd April 2025.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
