ESG Disclosure Requirements Under MiCA: Navigating Compliance

With the Markets in Crypto-Assets (MiCA) regulation now in effect as of December 30, 2024, Crypto Asset Service Providers (CASPs) operating in the EU must comply with new Environmental, Social, and Governance (ESG) disclosure requirements. While much attention has been given to MiCA’s broader regulatory framework, ESG data reporting remains an often-overlooked but critical component of compliance.

In a recent webinar, Josh Peschko, Global Head of Compliance and Regulatory Strategy at Talos, sat down with Tim Zölitz, CEO of Crypto Risk Metrics, to explore these new disclosure requirements and the data that supports compliance. Below are the key takeaways from the discussion.

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Key Takeaways for CASPs

Understanding MiCA’s ESG Disclosure Mandate

MiCA introduces sustainability reporting obligations for CASPs and crypto asset issuers. According to Article 66(5), firms must disclose adverse environmental impacts, focusing on energy consumption per crypto asset, carbon emissions and carbon intensity, and use of renewable energy of the crypto assets.

While MiCA itself is somewhat broad in defining ESG metrics, the European Securities and Markets Authority (ESMA) has specified up to 16 different indicators, including both quantitative data (e.g., energy consumption, carbon footprint) and qualitative disclosures (e.g., descriptions of consensus mechanisms and network incentive structures). However, for some CASPs, only 11 of these indicators may be required, with energy consumption disclosure being mandatory across all cases​.

Why ESG Compliance is a Challenge for CASPs

One of the biggest hurdles CASPs face is gathering reliable and verifiable ESG data. As Tim pointed out, compiling accurate metrics is highly complex, requiring robust measurement methodologies, continuous monitoring and updates, and access to network-wide energy consumption data.

Although ESG reports are only officially required once per year, any material changes in one of the indicators must be immediately disclosed. This means CASPs must effectively track and update data on an ongoing basis, rather than treating it as a one-time effort​.

How Crypto Risk Metrics Supports CASPs

To ease the burden of ESG reporting, Crypto Risk Metrics delivers compliance-ready ESG data via API, Excel, PDF, and CSV formats. Their expertise lies in:

• Daily ESG data calculations to maintain compliance readiness
• Advanced network crawlers that identify and assess blockchain nodes
• Certified testing methodologies to verify energy consumption of various hardware equipment being used in DLTs

By outsourcing ESG data collection to specialized providers like Crypto Risk Metrics, CASPs can focus on their core business while ensuring regulatory compliance.