80% of cryptocurrency companies are unaware of this key term!

The MiCA Regulation imposes new environmental sustainability disclosure obligations for crypto companies in Europe. However, it appears that many entities misinterpret the deadlines, which may lead to significant regulatory consequences.

Confusion among crypto companies about disclosure deadlines

Many crypto companies in the European Union appear to have no idea about the sustainability disclosure deadlines imposed, despite clarifications provided by regulators. According to Tim Zölitz, chief risk officer at Crypto Risk Metrics, the vast majority of crypto asset service providers are unaware that ESG (environmental, social and governance) data disclosures must begin on January 1, 2025. This confusion may be due to misinterpretation of the regulations, where some mistakenly believe that transparency obligations will only come into force with the publication of white papers on crypto assets, scheduled for 2027.

Despite explanations from the European Securities and Markets Authority (ESMA), many of these entities still do not know the exact requirements. Crypto Risk Metrics recently signed a Memorandum of Understanding with the Digital Token Identifier (DTI) Foundation to collaborate on ESG data display. This initiative aims to improve transparency and help crypto asset service providers comply with the new regulations. However, the environmental impact of crypto activities, particularly mining, remains a significant concern, potentially hindering wider adoption of these assets. The industry must adapt quickly to avoid potential sanctions and promote sustainable growth.

Explanations and consequences

The MiCA rules, established to regulate the crypto asset market in Europe, impose strict environmental transparency requirements. Under the guidelines, issuers of asset tokens (ARTs) and e-money tokens (EMTs) must start disclosing their environmental impact by June 30, 2024. Additionally, all crypto asset service providers must fully comply with the year’s ESG disclosure requirements. However, this obligation was often misunderstood, and some industry players wrongly believed that these disclosures were only required with the publication of white papers scheduled for 2027.

This misinterpretation is partly due to the original wording of MiCA, which was later clarified by the European Securities and Markets Authority (ESMA). In the consultation document, ESMA specified that information on environmental impacts must be published on entities’ websites, independently of white papers. The purpose of this explanation is to eliminate any confusion, but there are still gray areas.

Exchange platform operators must also ensure that this information is available in a clear and visible manner. Failure to comply could not only lead to regulatory sanctions but also tarnish the reputation of crypto companies, thereby hindering the adoption of these assets by major environmentally conscious institutional investors.

Luc José A.

Toulouse Diploma in Science and Blockchain Certification Consultant by Alyra rejoined Cointribune in 2019. It is estimated that the potential of blockchain technology has the potential to transform many sectors of the economy, which is a commitment to sensitize and inform the public about it an ecosystem in constant evolution. My goal is to enable everyone to understand blockchain technology and discover the opportunities it offers. Every day I try to objectively analyze reality, decipher market trends, communicate the latest technological innovations and put into perspective the economic and social achievements of this market revolution.

RESERVATION

The views, thoughts and opinions expressed in this article are solely those of the author and should not be considered investment advice. Do your own research before making any investment decisions.