Provision of Advice Related to Crypto-Assets According to MiCA - The Scope and Range of Obligations for Service Providers

In the previous post, I focused on the content of the advisory services related to crypto-assets according to the MiCA regulation. Now, I would like to briefly discuss the areas and scope of obligations for providers of this service, which are regulated by Article 81 of the regulation (this article also regulates the obligations within the management of crypto-asset portfolios).

MiCA in this case emphasises customer protection, particularly from the perspective of safeguarding against unsuitable investments and the related necessity of providing clear and accurate information about the risks associated with crypto-assets. Below is an overview of the main areas of obligations according to this article:

Assessment of the suitability of services – based on the knowledge, experience, investment objectives, risk tolerance, and financial situation of the specific customer (including the collection of necessary information about customers and the establishment of policies and reliable procedures for this purpose).

In connection with the above, providers must also regularly (at least every two years) review the suitability assessment for each customer. They must also provide customers with a suitability report, which will include recommendations and their alignment with the customer’s preferences and goals. Furthermore, if customers do not provide the required information or if the services are not suitable, providers must not recommend or begin offering these services.

Informing about the nature of the advice – whether it is provided independently and on what basis (broad or limited analysis of crypto-assets).

In the case of independent advice – it must not be limited solely to crypto-assets associated with the provider or closely related entities (it must therefore consider a wide range of crypto-assets available on the market).

Information on costs and fees – provided in advance and including the methods of payment for crypto-assets.

Knowledge and skills of individuals – persons providing advice must possess the necessary knowledge and skills.

Risk warnings – such as fluctuations in value, loss of value, illiquidity, and the absence of insurance or compensation.

From a practical standpoint, providers of advisory services or portfolio management will also be interested in the provisions of paragraphs 3, 5, and 6 of Article 81, which regulate the acceptance of fees, commissions, and other benefits.

For example, providers offering advice on an independent basis are not allowed to accept fees, commissions, or other benefits from third parties, with the exception of minor non-monetary benefits that do not impair the quality of the services provided.

If the advice is not provided independently, providers may receive incentives, provided that these incentives enhance the quality of the service and do not adversely affect the provider’s obligation to act in the best interests of the customers.

Providers of crypto-asset portfolio management services are not allowed to accept any fees or benefits from third parties related to this service.

For more information or a non-binding consultation regarding MiCA, do not hesitate to contact us at info@stuchlikova.com or by phone at +420 222 767 393.