Zumo highlights MiCA knowledge gap on crypto sustainability

credit: Ink Drop/Shutterstock
credit: Ink Drop/Shutterstock

Digital assets platform Zumo has released a new report revealing there is a considerable knowledge gap when it pertains to sustainability within Europe’s Markets in Crypto Assets (MiCA) regulation. 

Launched in Switzerland at the unDavos Summit, the MiCA CASP Sustainability Readiness Assessment snapshot report highlights a sustainability compliance knowledge gap amongst in-scope service providers.

The report detailed that 75% consider themselves ‘very familiar’ with MiCA regulation, less than a third said they are ‘knowledgeable’ about MiCA’s sustainability reporting obligations.

However, when asked regarding the steps taken to comply with the MiCA sustainability disclosure requirement, 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. 

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.

MiCA is one of the first comprehensive cryptocurrency regulations to deliver market rules and guidelines for operators to follow. Under MiCA Article 66, authorised operators need to have a compliant website disclosure covering the environmental impact of digital assets.

Kirsteen Harrison, Sustainability Director at 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.”

In Zumo’s survey, reputational damage (75%) was identified as the most significant risk of MiCA sustainability 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.

In a bid to educate and assist European digital asset companies with MiCA guidelines, Zumo’s Oxygen product helps these providers by aligning their activities with net zero principles. 

The feature helps operators more seamlessly access MiCA-compliant sustainability metrics for their listed crypto-assets.