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Crypto entity suitability rules are released by the European Banking Authority (ESMA).

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The collaborative directives encompass the granting of authorization for the issuance of asset-referenced tokens (ARTs) and the requisite prudential evaluations to be conducted by crypto asset service providers (CASPs) before contemplating potential acquisitions.

On the 20th of October, the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) jointly unveiled a consultation document, featuring two distinct drafts. Within the confines of these drafts lie the comprehensive assessment of the suitability of individuals holding management positions and shareholders or members who possess qualifying stakes in issuers of asset-referenced tokens (ARTs) and crypto asset service providers (CASPs).

The proposed collaborative guidelines, devised to assess the suitability of shareholders or members, whether through direct or indirect means, who possess qualifying stakes in ART or CASP issuers, bestow regulatory entities with a unified framework for scrutinizing their eligibility. This framework extends to the authorization for ART and CASP issuance and the conduct of prudential evaluations in preparation for potential acquisitions.

However, the guidelines formulated for the assessment of the fitness of individuals occupying management positions within ART and CASP issuer firms establish standardized criteria for evaluating their acumen, expertise, integrity, and their capacity to devote ample time to the discharge of their duties.

The ultimate objective of these guidelines is to preserve the integrity of the cryptocurrency market and cultivate trust in its associated services, all while minimizing the potential for disparities in rule application and arbitrage. The consultation window remains open for input until the 22nd of January, 2024.

Anticipating the impending regulatory landscape, the European Union’s banking overseer has urged stablecoin issuers to voluntarily embrace specific “guiding principles” pertaining to risk management and the safeguarding of consumer interests. The EBA introduced its initial set of measures for public review on the 12th of July, with the aim of elucidating the requirements stipulated by the Markets in Crypto-Assets regulation, scheduled for enforcement on the 30th of June, 2024.

Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.