ESMA Proposes Staff Assessment Guidelines for Crypto Firms Under MiCA Regulations

The European Securities and Markets Authority (ESMA) is looking to finalise some competence requirements for employees of crypto-related businesses. This week, the ESMA released a proposal that suggests guidelines in line with the EU's MiCA regulations, seeking feedback from crypto asset service providers, investors, and financial institutions engaging with crypto assets. As part of its proposal, the ESMA has outlined criteria like minimum qualifications and work histories for crypto firms to check before hiring staff members. By introducing this step, the regulatory agency said, it wants to ensure that only people with the right risk-and-benefit knowledge on crypto assets are permitted to engage with investors and help them make informed decisions.

The Paris-based body released its consultation paper on Monday, in alignment with the EU's crypto-focused MiCA rules. Through these guidelines, the ESMA aims to ensure that crypto firms hire ‘natural persons' knowledgeable enough to provide crypto-related advice to company clients and investors.

“The draft guidelines aim at ensuring that criteria for the assessment of knowledge and competence of staff members providing information or advice on crypto-assets effectively address features and risks specific to crypto-assets markets and services and which are less prominent or absent in traditional financial markets,” the ESMA paper states.

Key Highlights of the ESMA Draft Guidelines

The ESMA's draft guidelines divide its recommendations into four sections. Feedback questions have been added under each section for industry stakeholders to respond to.

Crypto-related service providers have been asked to ensure that their staff members know, understand, and comply with internal policies that are MiCA compliant under the first guideline. Crypto firms have been asked to conduct at least annual assessments to review the knowledge of their staff members, especially those who are tasked with giving financial advice on crypto investments to the company clients.

The second proposed guideline has directed crypto firms to regularly verify if their staff members are aware about the volatility and cybersecurity risks linked to the virtual digital assets (VDA) industry.

In addition, here the ESMA said that every employee working in a crypto firm must meet the minimum standards of professional qualifications, aligning with existing national frameworks like MiFID II and undergo continuous professional development (CPD) training to be up-to-date with latest developments.

Under the third and fourth guidelines, the ESMA has suggested crypto firms maintain updated competence reviews of their employees and provide their staff with the minimum number of CPD trading hours.

The regulatory body has asked industry stakeholders to either agree to the guidelines or add suggestions. They can also raise questions about unclear aspects of the proposal. The ESMA said it will consider all comments submitted by April 22. The responses will also be published publicly after April 22.

The EU's MiCA regulations went into effect on December 30. 2024. The legislation was finalised in 2022 to ensure that crypto-related practices are safe for industries and investors to engage with. From licencing requirements to clean business practices — the guidelines comprehensively cover a variety of dos and don'ts for Web3 firms looking to operate in the 27 EU nations.

In recent months, Kraken, BitPanda, OKX, Crypto.com, and Standard Chartered obtained official MiCA approvals to operate their businesses in the EU.