In member states of the European Union, cryptocurrency companies will need to enhance their cybersecurity measures and risk management strategies in accordance with a recently enacted regulation.
The European Union’s authorities have confirmed that the Digital Operational Resilience Act (DORA) officially came into force on January 17. This act is a unified and consistent legal framework across regions, which will oversee the digital resilience of financial institutions and cryptocurrency companies within member countries.
The New Regulation
EU authorities view the DORA policy as a significant move to strengthen the digital operational resilience structure of financial institutions across the member states. They explain that this new regulation is designed to tackle disparities and loopholes in cybersecurity risk management within the union.
As a researcher delving into the intricacies of financial regulations, I’d like to highlight an important point: The DORA (Data Openness and Transparency) regulation isn’t limited to traditional financial institutions such as banks. It extends its reach to encompass crypto-asset service providers, insurance companies, investment firms, and management companies as well. This broad scope underscores the comprehensive nature of this regulatory framework in today’s diverse financial landscape.
As a security analyst, I find myself preparing for the implementation of the Digital Operational Resilience Act (DORA) within the European Union’s cryptocurrency sector, effective from January 17. This means that all businesses dealing with digital assets in this region will now be subject to stricter cybersecurity regulations to ensure operational resilience and protect against potential threats.
How Will It Impact VASP?
Experts anticipate that the cybersecurity and robustness measures adopted by Virtual Asset Service Providers (VASPs) within the European Union may undergo significant changes as a result of the enactment of DORA regulations.
Under the latest EU regulation, there’s a requirement to create and update Information and Communication Technology (ICT) third-party risk management strategies. This includes implementing obligatory terms in agreements with ICT service providers and maintaining a database containing details of all current contractual arrangements.
Under this DORA rule, Virtual Asset Service Providers (VASPs) within the region may be impacted, as financial institutions operating in the EU will be required to maintain a thorough registry of their agreements with external technology service providers.
A representative from the cryptocurrency platform Gemini asserts that DORA (Distributed ledger-based Operational Resilience and Analysis) is crucial for enhancing the financial industry’s ability to withstand technology-related threats.
For the preparation of DORA, we’ve established a Digital Operational Resilience Strategy, an ICT risk management system, defined clear organizational structures, and adopted top-tier practices to maintain, secure, and strengthen our service continuity. This is what Gemini’s head of Europe, Mark Jennings, detailed.
Expanding MiCA Rule
Experts on cryptocurrency believe that the upcoming EU regulation, known as MiCA, aims to broaden its scope. This expansion is intended to strengthen crypto companies’ resistance to interruptions and cyber threats, thereby safeguarding investors and enhancing overall market trustworthiness. The objective behind this regulation, referred to as DORA, is to boost the robustness of these firms.
A representative from the cryptocurrency infrastructure company, MoonPay, stated that the recently proposed regulations under MiCA (Markets in Crypto Assets) will significantly affect companies holding a license within this domain.
According to Matt Sullivan, who serves as the deputy general counsel and head of Ireland at MoonPay, all cryptocurrency service providers that have been licensed under MiCA must comply with the DORA regulations.
MoonPay’s crypto infrastructure company has begun the process of becoming compliant with DORA regulations, while they received their MiCA license from the Netherlands Authority for the Financial Markets on December 30, 2024.
A Challenge To Small Service Providers
Cathy Yoon, legal advisor at Wormhole Foundation, stated that Virtual Asset Service Providers (VASPs) are well-positioned to adhere to the requirements of DORA and have generally strengthened their cybersecurity precautions to ensure they remain compliant with this latest regulation.
Yet, Yoon expressed concerns that startups and smaller service providers could encounter challenges in achieving DORA compliance due to resource limitations.
Yoon stated that adopting an active strategy towards security and implementing cybersecurity practices according to DORA could pose substantial consequences for smaller service providers, particularly resource-constrained startups who might find it challenging to meet the DORA compliance requirements.
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2025-01-19 05:42