A lack of harmonized definitions of key concepts, between EU member states as well as between different regulations, sets barriers against defining custody services for crypto-assets. This is concluded in a report by the European Securities and Markets Authority, Esma, according to Global Custodian.
New asset class poses challenge
The recent Esma paper points out that there is no harmonised definition of safekeeping and record-keeping of ownership of securities at an EU-level. That makes regulation difficult to apply to a new asset class such as crypto.
What do you mean?
Legislations such as MiFID II, UCITS V and AIFMD have varying definitions of where the safekeeping function should take place.
”Esma’s preliminary view is that having control of private keys on behalf of clients might be regarded as safekeeping services and that rules to ensure the safekeeping and segregation of client assets should apply to the providers of those services,” the authority writes in its paper.