Cardano Foundation Unveils Environmental Metrics in Compliance with EU MiCA Regulations
The Cardano Foundation, in partnership with the Crypto Carbon Ratings Institute (CCRI), has introduced a suite of sustainability metrics aimed at meeting the requirements of the Markets in Crypto-Assets (MiCA) regulation within the European Union. This move highlights Cardano’s dedication to transparency, sustainability, and regulatory adherence in comparison to other similar service providers, thus setting a notable standard for the wider crypto sector in the EU.
Alignment of Cardano’s Sustainability Report with MiCA Guidelines
On July 2nd, the Crypto Carbon Ratings Institute (CCRI) published a comprehensive report on Cardano to adhere to the directives of the Markets in Crypto-Assets (MiCA) regulation, which necessitates that crypto asset issuers and service providers divulge sustainability metrics. This alignment is congruent with the stipulations of MiCA’s Article 6(1) and Article 66(5), which mandate the provision of detailed information on environmental impacts by both token issuers and crypto-asset service providers.
To ensure meticulous blockchain monitoring and data collection, the Cardano Foundation, overseeing the ADA cryptocurrency, collaborated closely with CCRI. The report from CCRI underscores Cardano’s commitment to sustainability through its utilization of an energy-efficient consensus protocol.
In contrast to 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 usage is reported at 704.91 MWh. The report outlines various key metrics, including electricity consumption, the carbon footprint of the Cardano network, and marginal power demand per transaction per second, in line with the regulatory technical standards (RTS) proposed by the European Securities and Markets Authority (ESMA) under the MiCA framework.
ESMA’s second consultation package on MiCA, disclosed on October 5, 2023, delineates ten compulsory indicators for impacts related to climate and the environment, encompassing aspects such as energy utilization, greenhouse gas emissions, waste production, and natural resource exploitation. CCRI’s adherence to these standards ensures transparency and compliance with regulatory prerequisites.
Frederik Gregaard, CEO of the Cardano Foundation, emphasized the significance of these endeavors, underlining their role in establishing trust with regulators, investors, and users, thereby facilitating the sustainable broader adoption of blockchain technology. Gregaard stressed that this initiative showcases how blockchain networks can effectively tackle environmental, social, and governance (ESG) concerns while upholding transparency and operational efficiency.
Impact of MiCA on Service Providers
The initial phase of MiCA regulations concentrates on stablecoins, with forthcoming regulations set to affect crypto asset service providers including ecosystems like Cardano. Notable actions from other providers, such as Circle gaining the prestigious Electronic Money Institution (EMI) license under the MiCA regulatory framework on July 1, allowing for the issuance of USDC and EURC stablecoins in Europe, signify the changing landscape under MiCA.
Likewise, Bitstamp’s decision on June 26 to delist Euro Tether (EURT), Tether’s euro-pegged stablecoin, in response to EU MiCA regulations, alongside Binance’s strategic limitations on certain stablecoins to conform with MiCA guidelines, demonstrate the regulatory impact on stablecoin markets across the EU.
Effective since June 30, 2024, MiCA strives to create a standardized regulatory framework for crypto assets within the EU, mandating stringent safeguarding measures for fiat-backed stablecoin issuers, ensuring full reserve backing and access to stablecoins issued exclusively by regulated entities for public use.
