Want to trade crypto-assets? Which provider should you use? There’s a big choice, but not all of them are trustworthy.
Who is allowed to provide crypto-asset services in Austria?
If you buy or sell crypto-assets or hold them using custody services, you are using services that are only allowed to be offered by companies that are authorised as a Crypto-Asset Service Provider (CASP). Providers without such an approval are neither allowed to provide such services, nor to give the impression of being regulated. Authorisation means: Before a company is allowed to provide crypto-asset services, checks are conducted to ensure it is sufficiently well-equipped to do so. These checks assess its organisational structure, financial situation, IT systems and management. How it safeguards its assets also plays an important role.
This means: an authorised provider must adhere to clear rules before you are even allowed to invest. A supervisory authority monitors whether
- client funds and crypto-assets are in separate custody,
- risks are monitored,
- information is easy to understand,
- established procedures are in place for handling complaints.
Differences between providers
The legal framework under which providers operate is decisive when selecting a provider.
Providers with an authorisation in the EEA
Providers with an authorisation in an EU or EEA country are subject to harmonised European rules. They are also able to provide their services in other Member States (“passporting”). Supervision takes place in an entity’s country of origin, where the supervisor checks that legal requirements are met on an ongoing basis. What this means for you: Providers from other EU and EEA countries also use the same rules. If a provider is authorised in Austria, or is supervised here, then you also have a direct point of contact here, without a language barrier.
Providers outside the EEA
You may also encounter providers that are established outside the EU or the EEA. Such providers are not automatically dubious, but are not subject to European standards of supervision. This may mean that you are not as well protected, and may hamper your ability to assert your rights in the event of a problem. Providers that do not have an authorisation are not permitted to actively market and offer their services in the EEA.
Why this difference is important
Not every provider from outside the EEA is dubious. At the same time many providers consciously decide to established themselves outside Europe to circumvent stricter regulatory requirements.
Beware, crypto fraud!
It is important to differentiate providers that only pretend to provide such services. They seem credible and focus on building up your trust. In actual fact, their sole intention is to deceive and to get hold of your money. In such cases, the money you have “invested” is usually not recoverable.
How to check a provider:
In Austria, you can used the FMA Company Database. It lists all companies that are allowed to be active in Austria. ESMA maintains a central EU register for the entire European market. Taking a quick look in this register can help you make informed decisions.
Other editions:
Find out more:
A-Z of Finance: www.fma.gv.at > A-Z of Finance
Instagram: @redenwiruebergeld
Podcast: listen here!
Crypto-asset:
a digital unit of value that is represented and traded using distributed ledger technology (e.g. blockchain).
ESMA:
European Securities and Markets Authority.
EEA – European Economic Area:
a grouping consisting of EU
Member States as well as Norway, Iceland and Liechtenstein.
FMA Company Database:
A register of all companies that are allowed to provide financial services in Austria that require a licence.