Article 4
Conflict of interest policies and procedures referred to in Article 72(1) of Regulation (EU) 2023/1114
1. The conflict of interest policies and procedures shall be set out in writing and shall take into account:
|
(a) |
the scale, nature and range of crypto-asset services and other activities provided or carried out by the crypto-asset service provider; |
|
(b) |
where the crypto-asset service provider is a member of a group, any circumstances which may give rise to a conflict of interest due to the structure and business activities of other entities within the group. |
2. The management body of the crypto-asset service provider shall be responsible for the definition, adoption, implementation of those policies and procedures. It shall periodically assess and review their effectiveness and address any deficiencies in that respect.
3. Crypto-asset service providers shall establish effective internal channels to inform and provide ongoing access to employees and members of the management body of their conflict of interest policies and procedures and provide appropriate updated training on those conflict of interest policies and procedures.
4. The conflict of interest policies and procedures shall include:
|
(a) |
in relation to any crypto-asset service or activity provided by the crypto-asset service provider or carried out on its behalf by a consultant, adviser, delegatee or outsourcee, a description of the circumstances which may give rise to a conflict of interest as referred to in Articles 2 or 3; |
|
(b) |
the processes to be applied in order to identify, prevent, manage, and disclose the conflicts of interest referred to in Articles 2 and 3; |
|
(c) |
a clear reference to the organisational and managerial structure of the crypto-asset service provider. |
5. The conflict of interest policies and procedures shall take into account the risk of damage to the interests of one or more clients or the interests of the crypto-asset service provider.
6. The processes referred to in Article 4(4), point (b), shall include at least the following elements:
|
(a) |
measures to report and communicate promptly to the designated internal reporting channel any matter that may result, or has resulted, in a conflict of interest; |
|
(b) |
measures to prevent and control the exchange of information between connected persons engaged in activities involving a risk of a conflict of interest where the exchange of that information may harm the interests of one or more clients; |
|
(c) |
the separate internal oversight of connected persons whose principal functions involve carrying out activities on behalf of, or providing services to, clients whose interests may conflict with each other or with the interests of the crypto-asset service provider; |
|
(d) |
the removal of any direct link between the remuneration provided to the crypto-asset service provider’s employees, delegatees, outsourcees, subcontractors or members of the management body principally engaged in one activity and the remuneration of, or revenues generated by, different employees, delegatees, outsourcees, subcontractors or members of the management body of the crypto-asset service provider principally engaged in another activity, where there are demonstrable grounds that a conflict of interest may arise in relation to those activities; |
|
(e) |
measures to ensure that connected persons who perform outside business activities related to the crypto-asset service provider are prevented from having inappropriate influence within the crypto-asset service provider regarding those activities; |
|
(f) |
measures to prevent or control the simultaneous or sequential involvement of a connected person in separate crypto-asset services or activities where such involvement may impair the proper management of conflicts of interest; |
|
(g) |
measures to ensure that conflicting activities or transactions are entrusted to different persons; |
|
(h) |
measures to establish the responsibility of the members of the management body to inform other members of and abstain from voting on any matter where a member has or may have a conflict of interest; |
|
(i) |
measures to prevent members of the management body from holding management positions in competing crypto-asset service providers outside of the same group; |
|
(j) |
measures to prevent and control the exchange of information between connected persons engaged in activities involving a risk of a conflict of interest where the exchange of that information may affect the performance of such connected person’s responsibilities to the crypto-asset service provider. |
7. The crypto-asset service provider shall ensure that policies and procedures referred to in paragraph 3, point (b), provide reasonable reassurance that the risks of damage to the interests of the crypto-asset provider or its clients will be prevented or appropriately mitigated.
8. The conflicts of interest policies and procedures shall ensure that adequate resources, including adequate and independent human resources are dedicated by the crypto-asset service provider to their implementation, maintenance and review, including the appointment of a person that is responsible for the identification, prevention, management and disclosure of conflicts of interest.
That person shall have the authority necessary to discharge their responsibilities appropriately and independently and shall report directly to the management body.
Where that person has been entrusted with other roles or functions, those shall be appropriate given the scale, nature and range of crypto-asset services and other activities of the crypto-asset service provider, and shall not compromise the independence and objectivity of that person.
The conflict of interest policies and procedures shall define the skills, knowledge and expertise necessary for staff in charge of the responsibilities referred to in the first subparagraph and shall provide for such staff to have access to all relevant information for the discharge of their responsibilities.