The DLT Science Foundation (DSF) announced the launch of the MiCA Crypto Alliance on Sept. 16, with Hedera, Ripple, and the Aptos Foundation as founding members, according to a statement shared with CryptoSlate.

The Markets in Crypto Assets (MiCA) regulation, recently approved by the European Union, aims to create a regulated digital asset environment that protects crypto users while promoting innovation.

Standardized reporting

MiCA sets strict disclosure requirements for Crypto-Asset Service Providers (CASPs), including centralized exchanges. These providers must disclose the climate impact of their operations and must share this data through white papers and online descriptions accessible to the public.

Notably, the Cardano Foundation released the blockchain network’s sustainability indicators in July through a partnership with the Crypto Carbon Ratings Institute (CCRI).

However, the absence of a formal template poses challenges for CASPs, potentially leading to non-compliance.

The MiCA Crypto Alliance seeks to address this issue with the DSF as its technical partner. It aims to streamline compliance by coordinating efforts among major blockchain projects, foundations, and CASPs. The alliance hopes to simplify regulatory adherence and improve consistency by standardizing white paper content and sustainability indicators.

Members of the MiCA Crypto Alliance, including Hedera, Ripple, and the Aptos Foundation, will have access to exclusive sustainability metrics and AI-powered white paper generation tools provided by the DSF. These tools are designed to help members efficiently meet MiCA requirements and promote a higher standard of compliance and sustainability.

Dr. Paolo Tasca, Founder and Chairman of the DSF, stated that the sustainability disclosure requirements aim to drive climate accountability for projects and support responsible technological development. He added:

“In enabling the launch of the MiCA Crypto Alliance, we are committed to setting the standards for compliance with the regulation and providing projects with the tools and knowledge they need to thrive in this new landscape.”

Nilmini Rubin, Chief Policy Officer at Hedera, noted that the MiCA Crypto Alliance enables the network to collaborate with industry leaders to achieve shared goals. Rubin furthered that blockchain aims to enhance transparency and establish a cohesive regulatory framework that benefits consumers and the industry.

Bashar Lazaar, the Head of Grants & Ecosystem at Aptos Foundation, added:

“[The] coordinated efforts in standardising disclosure obligations are crucial for the long-term success and credibility of Web3.”

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Crypto exchange OKX selected Malta as its Market in Crypto-Assets (MiCA) hub to serve 450 million EU residents, according to a July 18 statement.

The exchange highlighted explained that this strategic move will allow it to offer services in compliance with local regulations while ensuring easy deposit and withdrawal connectivity to local bank accounts.

Under the MiCA framework, OKX plans to offer spot trading, including EUR and USDC pairs, and comprehensive crypto services allowing its users to buy, sell, convert, and stake popular digital assets.

Why Malta?

OKX explained that it chose Malta as its MiCA hub for various reasons, including its high regulatory standards.

According to the firm, the country is well-known for its comprehensive regulatory framework for blockchain technology. This makes it an ideal base for expanding its products into the European market, OKX said.

Furthermore, OKX stated that another significant factor influencing its choice was the robust infrastructure and local team it has developed in the country since 2018. It added:

“Our local entity, Okcoin Europe Ltd, has been licensed as a Class 4 Virtual Financial Assets (VFA) Service Provider by the Malta Financial Services Authority (MFSA) since 2021. This establishes a strong regulatory foundation for us to offer secure and compliant services across the EU.”

MiCA effect

The MiCA regulation is already significantly affecting crypto operations in Europe.

MiCA is a regulatory framework created by the European Union to standardize crypto regulations across member states. The European Parliament approved MiCA last year, and the rules are being implemented in phases.

The first phase of MiCA, targeting stablecoins, took effect on June 30. The second phase will follow in six months.

On July 1, Circle, the issuer of USDC, became the first global stablecoin firm to comply with MiCA. Additionally, the Cardano blockchain released its sustainability indicators to ensure compliance with the European MiCA regulations.

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The market capitalization of European stablecoins declined in June due to the implementation of the Markets in Crypto-Assets (MiCA) regulation, according to CCData’s latest stablecoin report.

The market cap of Euro-based stablecoins fell by 2.51%, hitting a seven-month low of $307 million, the lowest since November 2023. During this period, Tether’s EURT stablecoin’s market cap dropped by 26%, mainly due to delistings from major exchanges like Bitstamp.

CCData noted that MiCA’s implementation spurred interest in stablecoins that comply with local laws. MiCA, the EU’s comprehensive crypto regulation package, was recently enacted. It allows firms licensed by one member state to operate throughout the EU.

However, stablecoin issuers like Tether have criticized the rules for their stringent requirements, such as limits on trading volumes for certain stablecoins.

Despite these challenges, several issuers and their stablecoins, including Circle’s USDC and EURC, Societe Generale’s EURCV, Monerium’s EURe, Membrane’s EUROe, and Quantoz’s EURD, are recognized under the law.

Stablecoins volume fall

In June, the global stablecoin market cap rose by 0.53% to $161 billion, marking a nine-month growth streak and the highest stablecoin market cap since April 2022.

CCData said:

“Stablecoin market dominance is currently at 6.83%, rising from 6.22% in May. The increase in the stablecoin dominance highlights the negative price action of digital assets, with Bitcoin and Ethereum retracing the gains made following the surprise approval of spot Ethereum ETFs in the US.”

Despite the growth, stablecoin trading momentum has slowed amid a downturn in the digital asset market.

Stablecoin trading volume on centralized exchanges fell by 18% to a seven-month low of $907 billion in June. Similarly, on-chain transfer volume decreased for the second consecutive month by 7.5% to $1.8 trillion, the lowest since February 2024. This decline aligns with ongoing bearish market sentiments.

The report also highlighted that USDC had the highest on-chain transfer volume in June, surpassing USDT and DAI.

CCData stated:

“Among the top five stablecoins on Ethereum, USDC leads with $786 billion in on-chain transfer volume, representing 43.6% of the market share. USDT and DAI follow with transfer volumes of $616 billion and $334 billion, accounting for 34.2% and 18.5% of the volumes.”

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The Cardano Foundation, in partnership with the Crypto Carbon Ratings Institute (CCRI), has released the blockchain network’s sustainability indicators to ensure compliance with Europe’s Markets in Crypto-Assets (MiCA) regulation, according to a July 2 statement.

This release comes six months before the second phase of MiCA implementation for crypto asset providers. The initiative aims to align with MiCA requirements, mandating that crypto asset issuers and service providers disclose sustainability indicators. The first phase of MiCA, which targets stablecoins, took effect on June 30, with the second phase set to follow in six months.

To facilitate compliance, the Cardano Foundation collaborated with CCRI to gather and analyze quality data about the Cardano network. This collaboration resulted in a report that details comprehensive sustainability indicators specific to Cardano.

Cardano indicators

According to the report, Cardano employs an energy-efficient consensus protocol that consumes significantly less energy compared to Proof-of-Work blockchains like Bitcoin.

As of May 2024, the Cardano network has consumed only 704.91 MWh, translating to about 0.192 W per transaction per second (TPS).

The report also discloses Cardano’s annualized carbon footprint and the carbon intensity of its consumed electricity, which are 250.73 tCO2e and 356 gCO2 per kWh, respectively.

These sustainability metrics align with the draft regulatory technical standards (RTS) specified by the MiCA regulation. Cardano hopes this report will set a benchmark for other blockchain networks.

Frederik Gregaard, CEO of the Cardano Foundation, emphasized the growing need to address sustainability in the crypto space. He highlighted that the partnership with CCRI will help Cardano meet MiCA’s stringent requirements and assist financial institutions in integrating sustainability into their digital asset offerings.

Similarly, Dr. Ulrich Gallersdörfer, CTO and co-founder of CCRI noted the importance of scientific methodologies and real-world data in measuring and managing the environmental impacts of blockchain networks.

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Editor Editor

Liam ‘Akiba’ Wright

Senior Editor at CryptoSlate

Also known as “Akiba,” Liam is a reporter, editor and podcast producer at CryptoSlate. He believes that decentralized technology has the potential to make widespread positive change.

Binance will limit the availability of “unregulated stablecoins” in the EU by June 30, aligning with the upcoming Markets in Crypto-Assets Regulation (MiCA), according to a statement released on June 3.

The crypto exchange indicated that several stablecoins might not comply with the new regulations and will face restrictions. However, it did not specify which stablecoins would be affected.

Binance said:

“This will be a first step entering the new regulatory framework and it will have a significant impact on the stablecoin market in EEA.”

Phased approach

Binance plans to implement a phased approach to meet the new stablecoin regulations in Europe.

The exchange will allow users to convert holdings in unregulated stablecoins to other digital assets such as Bitcoin, Ethereum, regulated stablecoins, and fiat currencies. It added:

“These transitional measures aim at allowing EEA users to switch to Regulated Stablecoins while avoiding any market disruption and complying with MiCA stablecoin rules. “

Additionally, Binance will implement restrictions across its entire product range, preventing users from accessing new products or services involving unauthorized stablecoins.

As of press time, Binance has not responded to CryptoSlate’s request for further comments.

Impending MiCA regulations

The European Union’s MiCA legislation is expected to be fully operational by the end of 2024, and stablecoin regulations will be enacted this month.

Under these new rules, only Electronic Money Institutions (EMIs) and credit institutions can issue stablecoins, aligning with the existing EU Electronic Money Directive (EMD). Major crypto exchanges like Kraken and OKX are working to comply with these regulations, which may include removing Tether’s USDT stablecoin from their platforms.

In contrast, Circle and its USDC stablecoin are well-positioned to meet these requirements. Circle applied for an EMI license in December 2023 after securing conditional registration in France. This move is part of Circle’s strategy to align with the EU’s MiCA regime.

Dante Disparte, Circle’s Chief Strategy Officer, emphasized the significance of MiCA, stating:

“MiCA is not crypto’s Y2K moment that can be ignored. Really consequential developments are underway for digital assets in the world’s third-largest economy.”

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