Cardano Foundation Introduces Sustainability Metrics to Comply with EU MiCA Rules
The Cardano Foundation, in partnership with the Crypto Carbon Ratings Institute (CCRI), has launched a suite of sustainability metrics aimed at meeting the requirements of the Markets in Crypto-Assets (MiCA) regulation within the European Union.
This initiative underscores Cardano’s dedication to transparency, sustainability, and adherence to regulatory standards alongside other service providers, establishing a new benchmark in the wider cryptocurrency sector throughout the EU.
Alignment of Cardano’s Sustainability Report with MiCA Regulations
On July 2, the Crypto Carbon Ratings Institute (CCRI) published an extensive report on Cardano, aligning with the stipulations of the MiCA regulations which necessitate crypto asset issuers and service providers to disclose sustainability metrics. This compliance adheres closely to MiCA’s Article 6(1) and Article 66(5), requiring comprehensive information on environmental impacts from token issuers and crypto asset service providers.
The Cardano Foundation, overseeing the ADA cryptocurrency, collaborated closely with CCRI to ensure rigorous monitoring and data collection across its blockchain operations. The CCRI report underscores Cardano’s commitment to sustainability, particularly through its adoption of an energy-efficient consensus protocol.
In contrast to the energy-intensive Proof of Work (PoW) protocols such as Bitcoin, Cardano operates with significantly lower electricity consumption. As of May 2024, the network’s total annualized electricity consumption is reported at 704.91 MWh. The report emphasizes key metrics including electricity consumption, carbon footprint, and marginal power demand per transaction per second, all in line with the draft regulatory technical standards (RTS) established by the European Securities and Markets Authority (ESMA) under the MiCA framework.
ESMA’s second consultation package on MiCA, issued on October 5, 2023, outlines ten mandatory indicators focusing on climate and environment-related impacts, covering energy usage, greenhouse gas emissions, waste production, and natural resource utilization. CCRI’s adherence to these standards ensures transparency and compliance with regulatory obligations.
Frederik Gregaard, CEO of the Cardano Foundation, highlighted the significance of these efforts, emphasizing their role in fostering trust with regulators, investors, and users. He stressed that such initiatives showcase how blockchain networks can address environmental, social, and governance (ESG) concerns while upholding transparency and operational efficiency.
Impact of MiCA on Service Providers
The initial phase of MiCA regulations targets stablecoins, with further regulations affecting crypto asset service providers scheduled for introduction in December, impacting ecosystems like Cardano.
In a similar vein, Circle recently became the first global stablecoin issuer to secure an Electronic Money Institution (EMI) license under the MiCA regulatory framework as of July 1. This milestone enables Circle to issue its USDC and EURC stablecoins in Europe, positioning the company favorably within the European market.
Likewise, responding to MiCA regulations within the EU, Bitstamp announced on June 26 its decision to delist Euro Tether (EURT), Tether’s euro-pegged stablecoin. This move aligns with regulatory pressures and signals a broader impact on the stability and market accessibility of such stablecoins.
Additionally, Binance, the leading cryptocurrency exchange by trading volume, has restricted access to certain stablecoins within the EU to comply with MiCA regulations. Consequently, several existing stablecoins may face limitations, prompting Binance to offer users holding “unauthorized” stablecoins the option to convert them into alternative digital assets such as Bitcoin, Ether, regulated stablecoins, or fiat currency.
Effective since June 30, 2024, MiCA aims to establish a unified regulatory framework for crypto assets across the EU. Fiat-backed stablecoin issuers must implement stringent safeguarding measures and ensure full backing by liquid reserves. The regulation mandates that only stablecoins issued by regulated entities will be accessible to the public.
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