Insights from the MFSA Peer Review
A recent peer review of the Malta Financial Services Authority (MFSA) has unveiled critical insights into its practices for authorizing and supervising cryptocurrency asset service providers (CASPs). While the review highlighted that MFSA possesses a commendable level of resources and engagement in supervising these entities, several significant shortcomings were also noted, particularly in the areas of authorisation assessment.
Key Findings
Among the key findings, the review reported that numerous substantial issues remained unresolved at the time of granting authorisation to a CASP. Additionally, certain risk factors were insufficiently evaluated throughout the authorisation procedure. Nevertheless, the MFSA’s expertise and capacity for supervisory collaboration were recognized positively.
Recommendations for National Competent Authorities
In light of these findings, the review urges National Competent Authorities (NCAs) involved in CASP authorisations across the EU to pay close attention to various risk categories. These include aspects related to:
- Business expansion
- Governance conflicts
- Internal group arrangements
- Information and communication technology architecture
- Web3 and decentralized products
- Marketing of services lacking regulatory oversight
Although this assessment focuses specifically on a singular case, its broader objective is to promote robust authorisation practices for CASPs among NCAs within the EU. To this end, the conclusions drawn from the peer review should be integrated into the decisions of all NCAs to ensure thorough examinations in this rapidly evolving and high-risk sector, where supervisory expertise is continuously developing.
The Role of EU Supervisors
Furthermore, the review serves as a timely reminder of the essential role EU supervisors play in safeguarding the integrity of the EU single market within the cryptocurrency domain.
Future Directions
Moving forward, the goal of implementing these peer reviews is to advance consistency and standardization among different authorities throughout the EU. NCAs are expected to incorporate the review’s recommendations into their operational frameworks, affecting both current and future authorisation processes. The European Securities and Markets Authority (ESMA) will continue to facilitate dialogue regarding these recommendations and promote cooperation across borders.
