MiCA ESG
‍Regulation

The European Securities and Markets Authority (ESMA) has released its second consultation paper on the Technical Standards specifying certain requirements of the Markets in Crypto Assets (MiCA) Regulation.

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For Whom ?

The consultation paper is essential reading for crypto asset issuers, CASPs, financial entities dealing with crypto assets, and stakeholders interested in the crypto market's regulatory landscape. It offers valuable insights into the regulatory framework shaping the future of crypto assets in the European Union.

Sustainability Indicators

Mandatory

  • Energy Consumption: Total amount of energy used, expressed in kilowatt-hours (kWh) per calendar year.
  • Non-renewable Energy Consumption: Percentage of energy used from non-renewable sources.
  • GHG Emissions (Scope 1 and Scope 2): Expressed in tonnes of carbon dioxide equivalent (tCO2e) per calendar year.
  • Energy Intensity: Average amount of energy used in kWh per validated transaction.
  • GHG Intensity: Average GHG emissions (scope 1 and 2) per validated transaction, expressed in kg CO2e per transaction.
  • Waste Production: Including the generation of waste electrical and electronic equipment (WEEE) and hazardous waste, expressed in tonnes per calendar year.
  • Non-recycled WEEE Ratio: Percentage of WEEE not recycled.
  • Impact on Natural Resources: Description of the impact on natural resources due to the production, use, and disposal of the devices of the DLT network nodes​​.
More

Optional

  • Non-recycled Waste Ratio (All Types): Share of the total amount of waste generated that is not recycled, expressed as a percentage.
  • Waste Intensity (All Types): Total amount of waste generated per transaction validated, expressed in grams per transaction.
  • Waste Reduction Targets (All Types): Absolute or relative reduction in waste generation over one calendar year.
  • Natural Resources Use Reduction Targets: Absolute or relative reduction in the use of natural resources over one calendar year.
  • Water Use: Total water consumption linked to the validation of transactions and the maintenance of the distributed ledger, expressed in cubic meters.
  • Non-recycled Water Ratio: Share of the total water consumed that is not recycled and not reused, expressed as a percentage​​.
  • Energy Mix: Share of energy from non-renewable sources used, broken down by each non-renewable energy source, expressed as a percentage.
  • Carbon Intensity of Energy Used: Carbon intensity of the energy used for validation of transactions and maintenance of the distributed ledger, expressed in kgCO2e per kWh.
  • Energy Use Reduction Targets: Absolute or relative reduction of energy use over one calendar year.
  • Scope 3 GHG Emissions: GHG emissions for the validation of transactions and maintenance of the distributed ledger of transactions, expressed in tCO2e per calendar year.
  • GHG Emissions Reduction Targets: Absolute or relative reduction in GHG emissions over one calendar year.
  • Generation of Waste (All Types): Total amount of waste generated by the validation of transactions and the maintenance of the distributed ledger, expressed in tonnes per calendar year.

Why BitSCOR ?

Our commitment to transparency and operational resilience aligns with the ESMA's objectives, making BitSCOR a key player in advancing the sustainable and transparent development of the crypto market. Our engagement with the consultation process underscores our leadership in setting ESG standards in the crypto space and our dedication to fostering a responsible and regulated crypto market.

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FAQs

Key points of ESMA' second consultation paper ?

  • Sustainability Indicators:
    The consultation focuses on developing standards for the disclosure of sustainability indicators on adverse impacts on the climate and the environment related to crypto assets. It emphasizes the importance of identifying and disclosing the environmental footprint of consensus mechanisms used in crypto asset transactions.
  • Operational Continuity:
    ‍    The paper proposes standards to ensure the continuity and regularity in the performance of CASP services, highlighting the necessity for robust business continuity plans and ICT security arrangements.
  • Transparency:
    ‍    It outlines requirements for the presentation of pre- and post-trade data to the public, aiming to foster transparency in the trading of crypto assets on various platforms.
  • Record Keeping:
    ‍    The document stresses the importance of detailed record-keeping by CASPs to ensure compliance with regulatory obligations and enhance market integrity.

Why should you comply ?

  • Operational Resilience:
    ‍    The regulations aim to ensure that CASPs have robust operational and risk management processes. This improves business resilience and can prevent losses associated with operational disruptions.
  • Market Integrity:
    ‍    The standards developed will contribute to the integrity and transparency of the crypto asset market, which benefits all participants by creating a level playing field and fostering trust.
  • Consumer Protection:
    ‍    ESMA’s proposed standards are aimed at protecting consumers. Engaging with the consultation can help ensure that these protections are balanced with the practicalities of the crypto market.
  • Industry Reputation:
    ‍    Constructive engagement in the regulatory process can enhance the reputation of the industry and individual firms as responsible actors, which is particularly valuable in the relatively new and sometimes controversial crypto asset space.

Limits of ESMA' sustainability indicators ?

Certain indicators may not be universally applicable or relevant to all types of crypto transactions. A prime example is the suggested metric for calculating the rate of reused water in the energy mix of specific crypto transactions, such as an ADA/BNB trade. This metric can be both impractical and potentially misleading. Most indicators are actually more relevant to miners.

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