ESMA Proposes New Rules for Crypto-Assets with a Focus on Environmental Impact
The European Securities and Markets Authority (ESMA) has published a second consultation paper on the Markets in Crypto-Assets Regulation (MiCA). The paper covers a range of topics, including sustainability indicators, business continuity, trade transparency, record keeping, white papers, and public disclosure of inside information.
Sustainability Indicators
ESMA proposes a set of sustainability indicators that crypto-asset issuers will be required to disclose. These indicators are designed to measure the environmental and social impact of crypto-assets. This is a significant step forward, as it will provide investors with the information they need to make informed investment decisions.
Business Continuity
ESMA proposes a set of requirements that crypto-asset service providers (CASPs) must meet to ensure continuity and regularity in the performance of their services. These requirements include having a business continuity management plan in place and testing that plan regularly. This is important because it will help protect investors in the event of a disruption to a CASP’s services.
Trade Transparency
ESMA proposes a set of requirements for CASPs that operate a trading platform. These requirements are designed to ensure that pre- and post-trade data is publicly available in a timely and accurate manner. This will improve the transparency of the crypto-asset market and make it easier for investors to make informed trading decisions.
Record Keeping
ESMA proposes a set of requirements for CASPs on the records they must keep. These requirements are designed to ensure that CASPs have adequate records to meet their regulatory obligations. This is important because it will help protect investors and promote market integrity.
White Papers
ESMA proposes a standard format for crypto-asset white papers. This standard format is designed to make it easier for investors to understand the risks and opportunities associated with investing in crypto-assets. This is a welcome proposal, as it will help protect investors from fraudulent or misleading white papers.
Public Disclosure of Inside Information
ESMA proposes a set of requirements for CASPs on how to disclose inside information. These requirements are designed to ensure that inside information is disclosed in a timely and fair manner. This is important because it will help prevent insider trading and protect the integrity of the crypto-asset market.
A Greener Crypto Future Beckons
ESMA’s MiCA Consultation Takes Bold Step Towards a Greener Crypto Future
ESMA’s consultation paper takes a bold step towards a greener crypto future. While it addresses various crucial aspects of the crypto-asset industry, its recognition of the profound impact of crypto mining on the environment, carbon footprint, and e-waste generation stands out.
This conscientious consideration of crypto mining’s ecological footprint marks a watershed moment. It not only highlights the growing concern for environmental sustainability but also opens the door to the possibility of future regulations that could require traders and projects to shoulder the costs of carbon offsetting. As the crypto sector continues to expand rapidly, ESMA’s proposal sets a precedent that could reverberate throughout the industry, urging all crypto projects to take environmental responsibility seriously.
Overall, the proposals in ESMA’s second consultation paper are positive. They are designed to protect investors and promote market integrity in the crypto-asset market. It is important that all stakeholders engage with the consultation process to ensure that the final rules are effective and proportionate.
ESMA will consider all comments received by 14 December 2023.
