On 31 January 2025, the European Securities and Markets Authority (ESMA) published a supervisory briefing after consulting the crypto market surveillance authorities of the European Union Member States. The purpose of the published document is to develop common standards for assessing CASP authorisation applications.
Which areas of activity for CASPs have been agreed upon?
The objective of the consultation was to identify areas of importance to both crypto entrepreneurs and regulators in the process of examining a CASP licence application. As a result, among other things, recommendations were made relating to:
- Risk-based approach (e.g., the communication outlines the key drivers of risk in assessing a CASP, as well as the aspects essential for the functioning of a CASP within a group of entities),
- Substance and governance (e.g., the requirements for various departments, including, inter alia, the compliance function, as well as the risk management framework, are described),
- Outsourcing (outlined the main principles of outsourcing, categorising the areas of activity that are considered highly relevant for outsourcing),
- Fit and proper Assessment (ESMA suggested a framework for assessing the situation of CASP board members convicted of financial market abuse),
- Notifications (ESMA proposed a procedure for handling incomplete notifications of intent to provide crypto-asset services under Article 60(8) MICAR).
ESMA recommendations
ESMA has made recommendations regarding, inter alia, the whereabouts of board members, indicating that at least one board member should reside in the country of licensing. Similarly, key personnel must also reside in the country of licensing.
An important note is that the functioning of the CASP within the group is precisely defined. The CASP should have an influence on decisions made within the group. Furthermore, the supervisor must have no doubt that decisions relevant to the CASP's activities are not made outside the European Union.
With regard to outsourcing, ESMA assessed that it may involve even key areas of CASP operations, but it must not lead to a situation where most areas are outsourced, leaving few tasks for the CASP's internal structures. Outsourcing should be directed to entities based in the European Union. The supervisor reviewing the scope of outsourced services should consider not only the number of areas outsourced but also their importance to the CASP during the assessment.
What is the relevance of recommendations?
The briefing is of crucial importance to entrepreneurs preparing an application for a CASP licence. It is likely that the Polish Financial Supervision Authority will adhere to the recommendations made and consider them when assessing applications after the enactment of the Polish cryptoassets market Act.
An analysis of the briefing's content leads to the conclusion that the requirements for CASPs are similar to those for payment service providers, particularly national payment institutions.
Source:
https://www.esma.europa.eu/press-news/esma-news/esma-provides-guidance-mica-best-practices
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