(1)

Transactions relating to crypto-assets, including their issuance, are validated and recorded via consensus mechanisms, namely the rules and procedures to reach an agreement on the validation of a transaction among distributed ledger technology (DLT) network nodes, which are also responsible for holding records of all transactions on a distributed ledger. The achievement of consensus, which requires the use of materials and computing power, comes with impacts on the climate and environment, which differ across DLTs depending on their specific features.

(2)

The adequate identification and disclosure of the climate and other environment-related adverse impacts linked to the use of consensus mechanisms to issue crypto-assets is therefore key to the decision-making of those investing in crypto-assets.

(3)

It is important that investors receive accurate, fair, clear, not misleading, simple, concise and comparable information on the impacts of the technologies underpinning issuance of crypto-assets on the climate and the environment. At the same time, given the distributed nature of the technology at hand, it may be difficult to obtain and disclose accurate and reliable information in this regard. It is therefore necessary to develop a list of indicators that considers those constraints to provide investors with understandable and comparable information on the adverse impacts of consensus mechanisms, based on accessible and reliable data, including estimates where necessary and duly justified.

(4)

The information referred to in Article 6(1), first subparagraph, point (j), Article 19(1), first subparagraph, point (h), Article 51(1), point (g), and Article 66(5) of Regulation (EU) 2023/1114 to be included in the crypto-asset white papers and on the websites of crypto-assets service providers regards climate and other environment-related impacts of consensus mechanisms and is therefore closely linked. To ensure consistency, coherence and comparability of that information, it is appropriate to regulate it by way of a single Regulation.

(5)

To ensure consistency between the information found across crypto-asset white papers issued via the same consensus mechanism, as well as proportionality in complying with this Regulation, it should be possible, without prejudice to the entities’ respective legal obligations, to reuse information on the consensus mechanism that are relevant to a crypto-asset for which a crypto-asset white paper is prepared, where such information has already been published in the context of another crypto-asset white paper.

(6)

Considering that all disclosing entities remain responsible for their own disclosures, including where they source information from existing crypto-asset white papers, information included in the white papers and information made available on the websites of crypto-asset service providers should be reviewed on a regular basis and updated accordingly. Considering that disclosing entities may make use of independent third parties to obtain or verify information to be disclosed, the use of such independent third parties for those purposes should be disclosed and the relevant independent third-party identified.

(7)

To facilitate investors’ ability to compare between the adverse impacts of the consensus mechanisms on which are issued different crypto-assets, the information on crypto-asset service providers’ websites should allow the public to compare the adverse impacts on the climate and other environment-related adverse impacts of the consensus mechanisms and their incentive structures across all the crypto-assets in relation to which the crypto-asset service provider provides crypto-asset services.

(8)

To assess the impact of the consensus mechanism used to issue each crypto-asset on the climate and other environment-related impacts, it is appropriate to take into account both the validation of each transaction in the relevant crypto-asset, taking into account the DLT network nodes actively involved in the validation, and the maintenance of the integrity of a DLT by all DLT network nodes.

(9)

Key indicators should be used to easily understand the impacts on climate and other environment-related impacts of the consensus mechanisms. To incentivise the use of more climate and environmentally friendly consensus mechanisms and to prevent greenwashing practices, it is crucial to rely to the extent possible on quantitative metrics. Quantitative metrics should display gross energy consumption and emissions, without reflecting potential off-setting mechanisms.

(10)

Annual energy consumption should be used as the key mandatory indicator because it is considered to be the most conducive to investor awareness of the impact of consensus mechanisms. Considering the key role of electricity in the operation of DLT networks, electricity consumption should be considered a suitable proxy for energy consumption.

(11)

In order to ensure a proportionate approach to sustainability information, it is appropriate to require additional information with regard to consensus mechanisms with more significant climate and other environment-related adverse impacts, especially where they exceed a certain level of energy consumption. Therefore, supplementary key indicators on energy and greenhouse gas (GHG) emissions should be used for crypto-assets issued via consensus mechanisms with higher levels of yearly energy consumption in order to deepen investors’ understanding on the adverse impacts of such consensus mechanisms.

(12)

In addition to mandatory and supplementary key indicators, it should be possible to voluntarily include, in a specific part of the white papers or the websites of crypto-asset service providers, information on climate and other environment-related indicators that may be more complex to assess or for which it may be more difficult to find relevant data, for instance in relation to waste production and the use of natural resources, such as water.

(13)

To prevent greenwashing and to ensure the comparability of information to be included in the crypto-asset white papers and on the websites of crypto-assets service providers, information regarding optional indicators should be subject to the same harmonised rules on the presentation of information and on the methodologies as the information regarding mandatory and supplementary indicators. This applies, for instance, to indirect GHG emissions, such as upstream emissions linked to the equipment purchased by the DLT network nodes or downstream emissions related to waste management.

(14)

In order to foster consistency of disclosed information in the absence of consensus on a specific set of reliable methodologies to calculate the identified indicators at this stage, harmonised principles should nonetheless apply to ensure the comparability of disclosed information, avoid any methodological bias, and ensure the consistency of methodologies used with those referred to in the framework of the application of Directive (EU) 2022/2464 of the European Parliament and of the Council (2). As a result, information on energy consumption and GHG emissions should be aligned with the calculation guidance laid down in Commission Delegated Regulation (EU) 2023/2772 (3), while the methodology used to calculate each quantitative metric and any deviations from this calculation guidance should be disclosed.

(15)

Where information related to indicators is not available in a reasonable timeframe, estimates should be disclosed together with reasonable assumptions used to calculate such estimates and with details of the best efforts used to obtain the information. Therefore, where the location of nodes cannot be identified as needed for certain disclosures, local, regional or global data should be used as necessary and appropriate. This data should be disclosed together with details on the best efforts used to obtain the information.

(16)

This Regulation is based on the draft regulatory technical standards submitted to the Commission by the European Securities and Markets Authority (‘ESMA’), in cooperation with the European Banking Authority.

(17)

ESMA has conducted open public consultations on the draft regulatory technical standards on which this Regulation is based, analysed the potential related costs and benefits and requested the advice of the Securities and Markets Stakeholder Group established in accordance with Article 37 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council (4),

(a)

‘incentive structure’ means the set of incentives and penalties established as part of a consensus mechanism to economically incentivise distributed ledger technology (DLT) network nodes to cooperate in applying the rules and procedures of the consensus mechanism for the purpose of validating transactions in crypto-assets;

(b)

‘greenhouse gas (GHG) emissions’ means emissions of gases listed in Part 2 of Annex V to Regulation (EU) 2018/1999 of the European Parliament and of the Council (5) expressed in tonnes of CO2-equivalent;

(c)

‘climate and other environment-related indicators’ means the indicators listed in the section ‘Mandatory key indicator on energy consumption’ of Table 2 of the Annex, in the section ‘Supplementary key indicators on energy and GHG emissions’ of Table 3 of the Annex, and in the section ‘Optional indicators’ of Table 4 of the Annex;

(d)

‘scope 1 DLT GHG emissions’ means greenhouse gas (GHG) emissions generated from sources that are controlled by the distributed ledger technology (DLT) network nodes using the consensus mechanism;

(e)

‘scope 2 DLT GHG emissions’ means GHG emissions from the consumption of purchased electricity, steam, or other sources of energy generated upstream from the DLT network nodes using the consensus mechanism;

(f)

‘scope 3 DLT GHG emissions’ means all indirect, upstream and downstream GHG emissions not covered by points (d) and (e) that occur in the value chain of the DLT network nodes using the consensus mechanism;

(g)

‘energy from renewable sources’ or ‘renewable energy’ means energy from renewable sources or renewable energy as defined in Article 2, point (1), of Directive (EU) 2018/2001 of the European Parliament and of the Council (6);

(h)

‘waste’ means waste as defined in Article 2, point (23), of Directive (EU) 2018/2001;

(i)

‘waste electrical and electronic equipment’ (‘WEEE’) means waste electrical or electronic equipment as defined in Article 3(1), point (e), of Directive 2012/19/EU of the European Parliament and of the Council (7);

(j)

‘non-recycled waste’ means any waste not recycled within the meaning of ‘recycling’ in Article 3, point 17, of Directive 2008/98/EC of the European Parliament and of the Council (8);

(k)

‘hazardous waste’ means hazardous waste as defined in Article 3, point 2, of Directive 2008/98/EC;

(l)

‘natural resources’ means natural resources as defined in Table 2 of Annex II to the Delegated Regulation (EU) 2023/2772.