Response to consultation on Joint EBA and ESMA Guidelines on suitability assessments of the management body and holders of qualifying holdings under MiCAR
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However, providing further examples or case studies could enhance understanding, especially given the complex and evolving nature of crypto-assets and related services. It’s further worth pointing out that this suggestion aligns with the ESMA and EBA's intent to harmonise suitability assessments within the EU financial sector to ensure sound governance in financial institutions, as also indicated in the final report on joint EBA and ESMA guidelines on the assessment of suitability.
Nevertheless, additional guidance on applying this principle in practice, possibly through illustrative examples, could further aid in its practical application, particularly in the context of emerging markets such as the regulated crypto-asset market in the EU. One possible approach to this may be the inclusion of a decision-making framework or flowchart to assist in applying the proportionality principle, making it more accessible for entities of varying sizes and operational scopes.
However, It might be beneficial to include more detailed criteria or indicators for assessing good repute, considering the diverse backgrounds from which individuals in the crypto sector may come. A possible approach could be the proposal for the establishment of a standardised process for background checks and verifications, which could be harmonised across EU member states for consistency.
Nevertheless, It is essential that both individual competencies and the collective capabilities of the management body are considered to ensure effective governance. Therefore, we call for further guidance on how to assess collective suitability in practice, which would be beneficial, particularly in diverse and multi-disciplinary teams (which is often the case with CASPs and ART issuers).
Furthermore, we would want to point out that there will be a benefit in revisiting the provisions to ensure they remain relevant with evolving market dynamics and technological advancements.
Nevertheless, we suggest incorporating further guidelines on managing and documenting time commitments, especially in scenarios involving cross-functional or multiple roles within the same organisation.
Nevertheless, we would like to suggest enhancing these sections with more practical examples and scenarios that could further aid in their application and interpretation.
Nevertheless, the addition of a more detailed timeline for implementing corrective measures, as well as the provision of specific case studies and further guidance, could further clarify the expectations.
However, we suggest integrating feedback mechanisms in order to improve communication between the entities and the competent authorities.
Nevertheless, the provision of additional clarity on the practical aspects of implementing these assessments, especially in complex ownership structures, would be beneficial to their implementation,
Question 1: Are the sections on subject matter, scope, definitions, addressees and implementation of the draft joint EBA and ESMA Guidelines on the assessment of the suitability of the members of the management body of issuers of ARTs and CASPs appropriate and sufficiently clear?
These sections appear comprehensive and align with the regulatory expectations for the management body of issuers of ARTs and CASPs.However, providing further examples or case studies could enhance understanding, especially given the complex and evolving nature of crypto-assets and related services. It’s further worth pointing out that this suggestion aligns with the ESMA and EBA's intent to harmonise suitability assessments within the EU financial sector to ensure sound governance in financial institutions, as also indicated in the final report on joint EBA and ESMA guidelines on the assessment of suitability.
Question 2: Are the provisions on the application of the proportionality principle appropriate and sufficiently clear?
The provisions on the application of the proportionality principle seem appropriate and clear.Nevertheless, additional guidance on applying this principle in practice, possibly through illustrative examples, could further aid in its practical application, particularly in the context of emerging markets such as the regulated crypto-asset market in the EU. One possible approach to this may be the inclusion of a decision-making framework or flowchart to assist in applying the proportionality principle, making it more accessible for entities of varying sizes and operational scopes.
Question 3: Are the provisions on the notion of sufficiently good repute appropriate and sufficiently clear?
The provisions seem appropriate and sufficiently clear.However, It might be beneficial to include more detailed criteria or indicators for assessing good repute, considering the diverse backgrounds from which individuals in the crypto sector may come. A possible approach could be the proposal for the establishment of a standardised process for background checks and verifications, which could be harmonised across EU member states for consistency.
Question 4: Are the provisions on the notion of individual and collective appropriate knowledge, skills and experience appropriate and sufficiently clear?
The provisions seem appropriate and sufficiently clear.Nevertheless, It is essential that both individual competencies and the collective capabilities of the management body are considered to ensure effective governance. Therefore, we call for further guidance on how to assess collective suitability in practice, which would be beneficial, particularly in diverse and multi-disciplinary teams (which is often the case with CASPs and ART issuers).
Furthermore, we would want to point out that there will be a benefit in revisiting the provisions to ensure they remain relevant with evolving market dynamics and technological advancements.
Question 5: Are the provisions on the sufficient time commitment of a member of the management body appropriate and sufficiently clear?
The provisions seem appropriate and sufficiently clear.Nevertheless, we suggest incorporating further guidelines on managing and documenting time commitments, especially in scenarios involving cross-functional or multiple roles within the same organisation.
Question 6: Are the provisions in section D.3 and subsections D3.1 and D.3.2. on the suitability assessment appropriate and sufficiently clear?
The provisions seem appropriate and sufficiently clear.Nevertheless, we would like to suggest enhancing these sections with more practical examples and scenarios that could further aid in their application and interpretation.
Question 7: Are the provisions in section D.4 on corrective measures appropriate and sufficiently clear?
The provisions seem appropriate and sufficiently clear.Nevertheless, the addition of a more detailed timeline for implementing corrective measures, as well as the provision of specific case studies and further guidance, could further clarify the expectations.
Question 8: Are the provisions in section D.5 and D.6 on the assessment and decisions by competent authorities appropriate and sufficiently clear?
The provisions seem appropriate and sufficiently clear.However, we suggest integrating feedback mechanisms in order to improve communication between the entities and the competent authorities.
Question 9: Are the draft Joint Guidelines on the assessment of the suitability of the shareholders or members, whether direct or indirect, with qualifying holdings in issuers of ARTs or of CASPs appropriate and sufficiently clear?
The provisions seem appropriate and sufficiently clear.Nevertheless, the provision of additional clarity on the practical aspects of implementing these assessments, especially in complex ownership structures, would be beneficial to their implementation,