European regulators are launching a compliance sweep to review the operational resilience of custody services in the crypto sector.
On Wednesday, the European Securities and Markets Authority (ESMA) announced that the region’s regulators are undertaking a coordinated review that will assess the resilience of crypto-asset service providers, focusing on their provision of crypto custody.
The review, which will run from the second half of this year to the first half of next year, “will focus on risks inherent to distributed ledger technology, including governance arrangements, key and storage management, transaction controls, incident detection and response, smart contract risks, and dependencies on third-party providers,” ESMA said.
The exercise will be carried out by national regulators with a risk-based sample of registered crypto firms.
ESMA said the review reflects its oversight priorities, which have identified both operational resilience and crypto firms as key risks. It’s also intended to improve the harmonization of oversight in this area of the market.
A report on the results of the review is expected in the second half of 2027.