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Cardano’s Proactive Approach Paves the Way for MiCA Compliance

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The Cardano Foundation (CF) has published sustainability indicators for the Cardano network. These indicators are designed to align with the upcoming MiCA regulation of the European Union. CF has achieved this milestone six months before the regulatory deadline.

About MiCA

The MiCA (Markets in Crypto-Assets) Regulation is a comprehensive legal framework established by the European Union to regulate the crypto asset market within its jurisdiction. It came into force in June 2023 and aims to provide uniform EU market rules for crypto-assets that are not currently covered by existing financial services legislation.

The regulation covers key aspects such as:

  • Transparency: Crypto issuers and service providers must disclose relevant information to ensure transparency in the market.
  • Disclosure: Projects are required to disclose their sustainability indicators, which likely include their environmental impact and how they manage social and governance aspects.
  • Authorization and Supervision: Entities involved in issuing or trading crypto-assets need to be authorized and are subject to supervision to support market integrity and financial stability.

In essence, MiCA is designed to adapt existing financial rules to the innovative nature of crypto-assets, providing a harmonized system for regulating and supervising blockchain companies, cryptocurrencies, and other digital assets within the EU. This regulatory framework is expected to enhance market integrity, financial stability, and consumer protection in the crypto asset market.

About MiCA Compliance Report

Frederik Gregaard, the CEO of the Cardano Foundation, has highlighted the importance of developing sustainability indicators that comply with the MiCA regulation as a key factor in establishing trust among regulators, investors, and the user community.

Frederik Gregaard said:

With the MiCA regulations partially coming into effect this week, the industry is now on a six-month countdown to implement crucial ESG binding requirements. As the crypto market matures and the MiCA regulations come into full effect, such efforts will be crucial in building trust with regulators, investors and users alike, paving the way for wider adoption of blockchain technology in a sustainable manner.

The Cardano Foundation, in collaboration with the Crypto Carbon Ratings Institute (CCRI), released a MiCA compliance report on July 2nd. This report reveals that Cardano’s energy-efficient consensus protocol significantly reduces electricity consumption, especially when compared to traditional proof-of-work protocols.

The report includes detailed data on Cardano’s annual electricity usage, its carbon footprint, and the incremental power demand for each transaction per second. These figures are in accordance with the preliminary regulatory technical standards proposed by the European Securities and Markets Authority, demonstrating Cardano’s early compliance and leadership in regulatory preparedness.

Through these initiatives, Cardano is not just aligning with imminent EU regulations but is also establishing a standard for the crypto industry at large. Gregaard underscores the significance of these measures in fostering the broader acceptance of blockchain technology, emphasizing sustainability as a cornerstone of this progress.

Conclusion

The Cardano Foundation has demonstrated its proficiency through proactive actions. Cardano benefits from having a dependable partner that addresses critical issues in advance, thereby averting potential difficulties. As Cardano transitions to on-chain governance, it is not anticipated that DReps or Constitution Committee members will undertake such tasks for the project.

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