The MiCA CASP Sustainability Readiness Assessment report, launched at the unDavos Summit in Switzerland, found that while 75% of CASPs consider themselves “very familiar” with MiCA, less than a third are “knowledgeable” about its sustainability reporting obligations. Only 25% are prepared to be compliant with these requirements, with 63% still exploring options and over 10% yet to take any steps.

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, Zumo’s sustainability director, 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.