European Securities and Markets Authority (ESMA) announced that national regulators will start to check that crypto asset service providers (CASPs) have resilient digital asset custody processes in place. The program will run for the next year. It comes as the transition period for nationally licensed crypto exchanges ended, with some large exchanges such as Binance currently unlicensed after withdrawing its Greek application days before the deadline.
There are now 283 registered CASPs in the EU, with more than a quarter of them awarded a license since the start of June. The key benefit of a MiCA license is it allows the CASP to target clients throughout Europe rather than just its own country.
The custody review will focus on governance arrangements, key and storage management, transaction controls, incident detection and response, smart contract risks, and dependencies on third party providers. While this is a MiCA related review, “digital operational resilience” is actually wording from another piece of EU legislation, DORA. Several substantial crypto losses have been around custody deficiencies, making this a fertile area to review controls.
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