Less Than a Third of Crypto Companies Fully Understand MiCA Sustainability Reporting Obligations

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Less Than a Third of Crypto Companies Fully Understand MiCA Sustainability Reporting Obligations

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Zumo, the B2B digital assets platform, today launches a new survey report exploring the preparedness of Crypto-Asset Service Providers (CASPs) for the EU’s incoming Markets in Crypto-Assets (MiCA) regulation, with a particular focus on sustainability requirements.

The MiCA CASP Sustainability Readiness Assessment snapshot report highlights a sustainability compliance knowledge gap amongst in-scope service providers. Whilst 75% consider themselves ‘very familiar’ with MiCA regulation, less than a third say they are ‘knowledgeable’ about MiCA’s sustainability reporting obligations.

Zumo is launching the report in Davos, Switzerland, at the unDavos Summit – a series of high-level industry panels that takes place in parallel to the World Economic Forum’s Annual Meeting – where the company is speaking at a series of roundtables on how MiCA will work in practice, attended by government representatives and policy makers.

When asked about steps taken to comply with the MiCA sustainability disclosure requirement, only 25% of respondents said they were already prepared to be compliant, while 63% said they were still exploring compliance options. More than one in ten haven’t taken any steps yet.

Unclear regulatory requirements and expectations were the most frequently cited challenge in achieving MiCA sustainability compliance, mentioned by 50% of respondents, with the same proportion highlighting the lack of ready-made industry solutions. Additionally, approaching two-fifths of respondents (38%) highlighted the resource required to address the requirements as a significant barrier, while around a third (31%) pointed to the lack of available information.

Kirsteen Harrison, Sustainability Director, Zumo, said: “One of the core themes at the World Economic Forum’s Annual Meeting this week is ‘rebuilding trust’, looking at how stakeholders can find new ways to collaborate on solutions. This resonates well with the fast-growing crypto sector, where MiCA sustainability disclosures aim to boost transparency and reporting associated with the environmental impact of our industry.”

“Our report emphasises that sustainability policy outcomes are unlikely to be achieved without further regulatory engagement, and that’s why we have come to Davos to help drive greater collaboration between the industry and Europe’s regulatory bodies and policy makers. We’ve been working extremely hard to close the knowledge gaps that exist around MiCA, as well as helping crypto companies to better understand the broader sustainability agenda of which MiCA forms one part.”

“By fostering dialogue, championing actionable steps, and providing new, accessible solutions, we are supporting the transition towards a more transparent, sustainable, and compliant crypto industry.”

Peter Kerstens, Adviser at the European Commission, who reviewed and commented on the report, added: “Sustainability of crypto-assets and in particular their validation protocols are a key policy concern. That is why MiCA contains disclosure requirements, aimed at informing consumers and investors on the relative sustainability of crypto-assets. They require sound information to make responsible decisions. CASPs should recognise this. They should not look at MiCA – be it the sustainability or other requirements – from a compliance perspective only. They should also, and preferably, look at it as an opportunity to access the EU-wide market.”

MiCA was introduced to implement uniform EU market rules for crypto-assets. As mandated in MiCA Article 66, MiCA authorised CASPs – including exchanges, brokerages, custodians and trading firms – that are active in the EU, or wish to provide their services into the EU, now need to have a compliant website disclosure in place covering the environmental impact of offered crypto-assets.

In Zumo’s survey, reputational damage (75%) was identified as the most significant risk of MiCA non-compliance, followed by financial penalties (69%) and regulatory sanctions resulting in lost customers or revenue (69%). Loss of customer trust (31%) was also highlighted as a notable concern.

Zumo is widely seen as a pioneer for its sustainability work in the digital assets sphere. The company was a member of the World Economic Forum’s Crypto Sustainability Coalition, which explored how blockchain tools can be leveraged to contribute to meaningful progress towards climate action, and recently signed the Abu Dhabi Sustainable Finance Declaration.

Zumo also provides MiCA sustainability indicator compliance measurement and reporting through its award-winning Oxygen product, introduced to help providers of crypto-asset services better align their digital asset activities with net zero principles. The feature will help CASPs more easily access MiCA-compliant sustainability metrics for their listed crypto-assets.

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January 21, 2025 at 09:27AM