The European Securities and Markets Authority (ESMA) has criticized the Maltese Financial Services Authority (MFSA) regarding its authorization process for a crypto asset service provider (CASP). The findings were part of a peer review highlighting deficiencies in licensing practices.
Shortcomings in the Authorization Process
ESMA found that the licensing process by MFSA only "partially met expectations," noting several unresolved issues. These included outstanding remediation from past enforcement cases and pending supervisory concerns that should have been settled before issuing the license.
Assessment and Oversight Review
The review, conducted by ESMA’s Peer Review Committee, highlighted the lack of adequate assessment of key aspects of the authorization, such as conflicts of interest and governance structures. The report indicated, "The committee did not find evidence that certain key aspects were adequately assessed."
Tightening Transparency Rules for Crypto Firms
In May, MFSA issued a directive requiring firms operating in the EU to provide clear information about their products. This aims to ensure transparency in communications and align with consumer expectations.
ESMA's critique highlights the need for improvements in licensing and supervisory processes in the crypto space in Malta. Implementing stricter rules and transparency measures may foster a safer environment for consumers.
