ESMA aims to set crypto proficiency standards.
European securities regulators are consulting on proficiency requirements for providing advice on crypto under the region’s new regulatory framework for the crypto sector.
The European Securities and Markets Authority (ESMA) issued a paper on Tuesday that seeks feedback on establishing minimum knowledge and competency requirements for the staff of crypto firms when it comes to giving information or advice on cryptoassets and crypto services.
In the paper, ESMA said increasingly easy access to crypto trading for retail investors, coupled with an apparent lack of knowledge by investors, and the added risks posed by cryptoassets (compared with traditional financial instruments), poses an increased risk of retail investor harm. As a result, it’s essential that crypto firms’ employees who give advice in this area are capable of fulfilling their obligations under the new crypto regime, “such as the requirement to act in the best interests of clients,” it said.
Among other things, ESMA said these employees should understand the key characteristics, risks and features of cryptoassets and services, including the added risks posed by the complexity and volatility of these assets; the fees and costs faced by investors; how crypto markets function and these assets are priced; and the potential impact of investor sentiment and social media on cryptoassets, which makes them highly volatile and unpredictable.
Source: INVESTMENTEXECUTIVE
