A new report from digital assets platform Zumo has found that although 75% of crypto-asset service providers (CASPs) consider themselves ‘very familiar’ with the EU’s MiCA regulations, less than a third (31%) are knowledgeable about the law’s sustainability reporting obligations.

Zumo’s snapshot report, The MiCA CASP Sustainability Readiness Assessment, highlights a considerable sustainability compliance knowledge gap amongst service providers, with 13% reporting they are ‘somewhat aware’ of the new sustainability rules, while 6% said they were not aware of these at all. 

The survey, based on responses from 16 leading CASP stakeholders from across Europe, also revealed that most crypto platforms have not taken concrete steps to become compliant with MiCA regulations.

Within the new framework, both crypto-asset service providers and those issuing and offering crypto-assets are required to report their impact on the environment, in the hope of encouraging more environmentally friendly solutions in the crypto sector, and ensure that consumers are aware of their own impact. 

For MiCA authorised CASPs – including exchanges, brokerages, custodians and trading firms – that work in the EU, or want to begin providing services into the EU, there is now a need to have a compliant website disclosure in place covering the environmental impact of all offered crypto-assets.

When asked about steps taken to comply with the MiCA sustainability disclosures, 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.

Interestingly, more CASPs reported being at the compliance exploratory stage around MiCA sustainability disclosure requirements than for the MiCA framework as a whole, where only 31% reported being at the compliance planning stage.

Unclear regulatory requirements and expectations were the most frequently cited challenge in achieving MiCA sustainability compliance, mentioned by 50% of respondents, with the same number highlighting the lack of ready-made industry solutions. 

Additionally, almost two-fifths of respondents (38%) said that finding the resources required to address the new requirements was a significant barrier, while around a third (31%) pointed to the lack of available information, and more than one in ten (13%) said they had difficulty determining the scope of their liability.

Even if crypto service providers feel unable to meet the MiCA requirements, most understand the risks. Zumo’s survey showed that reputational damage (75%) was considered the most significant risk of MiCA non-compliance, followed by financial penalties (69%), regulatory sanctions resulting in lost customers or revenue (69%), and loss of customer trust (31%).

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“Sustainability of crypto-assets and in particular their validation protocols are a key policy concern,” said Peter Kerstens, DG FISMA at the European Commission.

“That is why MiCA contains disclosure requirements, aimed at informing consumers and investors on the relative sustainability of crypto-assets. 

“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.”