ESMA’s Latest Consultation on Crypto: Sustainability and Transparency Insights

Second Consultative Paper Released

On October 5, the European Securities and Markets Authority (ESMA) hit the headlines by unveiling its second consultative paper regarding the Markets in Crypto-Assets (MiCA) framework. This hefty 307-page tome is not just bedtime reading; it aims to gather valuable input from stakeholders across the crypto landscape.

Key Areas of Focus

The consultative paper zeroes in on five critical areas concerning MiCA:

• Sustainability indicators for distributed ledgers
• Disclosure of insider information
• Technical requirements for white papers
• Trade transparency measures
• Record-keeping for crypto-asset service providers (CASPs)

Sustainability Takes Center Stage

Amidst all the crypto chatter, sustainability isn’t just a buzzword; it’s a growing concern. The ESMA’s focus on sustainability metrics includes:

• Quantitative measures on energy consumption
• Insights into greenhouse gas emissions
• Evaluations on waste production

Additionally, they’re looking for qualitative statements regarding how blockchain network equipment impacts natural resources. Who knew safeguarding the planet could be intertwined with crypto?

Transparency in Trading

When it comes to trading, the ESMA is advocating for a higher level of transparency. They’re pushing for CASPs to provide detailed reports that contain:

• Trading and publication date and time
• Identification of the crypto-asset
• Pricing information
• Quantity traded
• Venue of execution
• Transaction ID

These measures are designed to enhance trust and clarity in the often murky world of crypto transactions.

Data Flexibility for CASPs

In a nod to technological flexibility, the ESMA is suggesting that CASPs can store transaction data in formats they find most suitable, as long as they can produce it in specified formats upon request from authorities. Think of it like being able to use your favorite mug but still being able to pour your coffee into a standard cup when company comes over!

Next Steps for Regulatory Framework

After digesting the feedback from this consultation, the ESMA is set to publish a final report and shoot over draft technical standards to the European Commission by June 30, 2024. But don’t put down that notepad just yet! A third consultation package is on the horizon, aiming for a release in Q1 2024.

What Was in the Previous Paper?

For those who missed the previous paper released in July, it laid the groundwork by proposing additional information requirements for crypto companies planning to register under MiCA. They must notify the national authorities of their home countries about their operations. Another layer of bureaucracy in the wild west of crypto!