ESMA opens second consultation on crypto market rules
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, today published a second consultation package under the Markets in Crypto-Assets Regulation (MiCA).
Stakeholders are encouraged to provide their feedback to this consultation by 14 December 2023.
In the documents, ESMA is seeking input on five sets of proposed rules, covering:
- sustainability indicators for distributed ledgers;
- disclosures of inside information;
- technical requirements for white papers;
- trade transparency measures; and
- record-keeping and business continuity requirements for crypto-asset service providers.
ESMA notes that a growing number of entities active in crypto-asset markets are voluntarily disclosing information on their sustainability impacts, including comparisons between crypto-assets, and using third-party sources to draw up such sustainability statements.
Based on an initial analysis of the academic body of research to date and of the methodologies currently used by providers of sustainability data in relation to crypto-assets, ESMA considers that the sustainability impact of the consensus mechanisms can be anchored in three main features of the DLT network nodes:
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the energy consumption of each DLT network node;
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their location; and
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the devices that each DLT network node uses both to take part in the DLT network, such as application-specific integrated circuits (ASICs), and
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to hold a replica of records of all transactions on a distributed ledger, including servers and equipment used to maintain their integrity.
In particular, the location of the DLT network nodes may be used as a proxy to estimate greenhouse gas (GHG) emissions, while the waste production and the use of natural resources throughout the lifecycle (production, use and disposal) of the hardware equipment of each DLT network node can be assessed.
Persons drawing up crypto-asset white papers and CASPs will be expected to identify these main features and combine them with relevant datasets (e.g., on countries’ energy mixes and on lifecycle assessments for hardware equipment), in order to obtain comparable and reliable assessments of the sustainability impact of consensus mechanisms.
ESMA will publish a final report on the basis of feedback received and submit the draft technical standards to the European Commission for endorsement by 30 June 2024 at the latest.
The regulator will also publish a third consultation package with the remaining 18-month mandates in Q1 of 2024.