Many crypto asset service providers (CASPs) in the European Union (EU) appear unaware of the correct deadline for disclosing sustainability data, highlighting ongoing confusion despite regulatory clarifications by the European Securities and Markets Authority (ESMA).

According to Tim Zölitz, Chief Risk Officer at Crypto Risk Metrics, a significant majority—more than 80%—of CASPs are not yet prepared to report environmental, social, and governance (ESG) data starting from January 1st, 2025. This lack of awareness persists despite ESMA's efforts to outline specific requirements under the Markets in Crypto Assets regulation (MiCA), which became law in 2023.

MiCA mandates licensing for crypto issuers and service providers, including exchange platforms, with additional rules for stablecoins already in effect since June. However, requirements for issuers of asset-referenced tokens (ARTs) and electronic money tokens (EMTs) to disclose sustainability data are set to commence from June 30, 2024. CASPs must begin meeting these disclosure obligations by the end of the year.

The confusion stems partly from differing interpretations of MiCA's language, even though ESMA has issued clarifications through consultation papers. Zölitz highlighted that initial interpretations suggested ESG disclosures were tied only to the publication of crypto-asset white papers, with a deadline extended to December 2027. However, ESMA's subsequent guidance in consultation paper two unequivocally mandates CASPs to prominently display ESG data on their websites for all relevant crypto-assets, regardless of white paper availability.

This regulatory framework aims to ensure transparency regarding environmental impacts, especially concerning mining operations, a critical concern for the crypto industry's reputation and engagement with institutional investors.

Crypto Risk Metrics recently signed a Memorandum of Understanding (MoU) with The Digital Token Identifier (DTI) Foundation to collaborate on displaying ESG-related data, further emphasizing the industry's efforts towards regulatory compliance and transparency.

ESMA, when approached for comment, did not respond immediately to queries regarding these developments, underscoring ongoing regulatory challenges and the need for clear communication within the EU's evolving crypto regulatory landscape.