B2B digital assets platform, Zumo is sharing insights at the unDavos Summit in Davos, Switzerland about how the incoming Markets in Crypto-Assets (MiCA) regulation will work in practice as a new report reveals that less than a third of crypto-asset service providers (CASPs) say they are ‘knowledgeable’ about the sustainability reporting obligations.
These findings were published in a report, called the MiCA CASP Sustainability Readiness Assessment, by Zumo at the event, parallel to the World Economic Forum‘s Annual Meeting, and explored the preparedness of CASPs on the regulation that came into effect on 30 December 2024.
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 in the EU, now need to have a compliant website disclosure in place covering the environmental impact of offered crypto-assets.
Familiarity with MiCA
The report found that whilst 75 per cent of CASPs consider themselves ‘very familiar’ with the MiCA regulation, only 25 per cent are actually prepared to be compliant. Sixty-three per cent said they were still exploring compliance options but shockingly, 10 per cent still haven’t taken any steps to be compliant.
The knowledge gap on sustainability compliance could exist for a variety of reasons. Unclear regulatory requirements and expectations were the most frequently cited challenges in achieving MiCA sustainability compliance, as mentioned by 50 per cent of respondents. The same proportion highlighted the lack of ready-made industry solutions. Additionally, 38 per cent highlighted the resources required to address the requirements as a significant barrier, while 31 per cent pointed to the lack of available information.
In Zumo’s survey, reputational damage (75 per cent) was identified as the most significant risk of MiCA non-compliance, followed by financial penalties (69 per cent) and regulatory sanctions resulting in lost customers or revenue (69 per cent). Loss of customer trust (31 per cent) was also highlighted as a notable concern.
Need regulatory engagement
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.”
Zumo 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.
An opportunity to access a wider market
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.”
