ESMA Warns CASPs on Misperceptions of Unregulated Services

The European Securities and Markets Authority (ESMA) has cautioned Crypto-Asset Service Providers (CASPs) against creating confusion between regulated and unregulated services. ESMA emphasizes the importance of acting professionally, fairly, and in the best interests of clients when offering both regulated and unregulated services under the Markets in Crypto-Assets Act (MiCA). CASPs must avoid giving a 'halo effect' by misleadingly suggesting that all services are protected under MiCA.

Key Takeaways:

• CASPs must act professionally, fairly, and in the best interests of their clients or prospective clients when offering regulated and unregulated services.
• Providing both regulated and unregulated services can lead to investor protection risks, and CASPs must implement necessary safeguards.
• Unregulated activities conducted by CASPs do not provide the same level of protection as MiCA-regulated services, which include preventive measures such as managing conflicts of interests, safeguarding clients' assets, and ongoing supervision by national authorities.
• CASPs must avoid creating confusion by implying that unregulated products and services are equally protected under MiCA.
• CASPs must clearly communicate their regulatory status to clients, distinguish unregulated activities on their websites and platforms, and identify potential conflicts of interests.
• CASPs must not use terminology implying that unregulated products or services are regulated, only show information about unregulated status in Terms and Conditions, or use their regulatory status as a promotional tool.

Statistics:

• None mentioned in the source material.

Sources:

• European Securities and Markets Authority (ESMA).