The post ESMA warns national authorities over authorization of non-EU digital asset firms appeared on BitcoinEthereumNews.com.

The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, released an ‘Opinion’ concerning the authorization of global digital asset firms under the Markets in Crypto Assets (MiCA) regulation, the first part of which came into force at the end of June. The Opinion addressed the potential risks associated with digital asset firms seeking EU authorization for activities such as brokerage while keeping significant parts of their operations outside the EU’s new regulatory framework. “ESMA recognises risks associated with global crypto firms’ complex structures where execution venues fall outside of the scope of MiCA,” said the regulator. “Such structures may include the involvement of an EU-authorised broker effectively routing orders to an intra-group execution venue based outside the EU.” In this context, an “intra-group execution venue” is a place where trades are made between different parts of the same company or group of companies. ESMA is concerned that EU-authorized brokers routing orders to such a venue based outside of the EU could undermine consumer protection and lead to an unlevel playing field with EU-authorized execution venues. For this reason, the bloc’s top financial watchdog recommended that National Competent Authorities (NCAs), the relevant regulators across each EU nation, be vigilant during the authorization process and “assess business structures of global firms to ensure that they do not bypass obligations established in MiCA, to protect consumers and ensure transparent and orderly functioning of crypto markets.” The Opinion called for a “case-by-case assessment,” outlining the specific requirements that should be met around best execution; conflicts of interest; the obligation to act honestly, fairly and professionally in the best interests of clients; and the obligation relating to the custody and administration of digital assets on behalf of clients. “Crypto-asset execution venues play an important role in the functioning of the…

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Filed under: News - @ August 6, 2024 9:26 am