Exporting Environmental-Friendly Digitalisation? Implications of EU’s MiCA Regulation on the Global Governance of Crypto Systems
39 Pages Posted: 19 Feb 2024
Date Written: April 4, 2023
Abstract
In the European Union, MiCAR creates a new legal framework for crypto-assets. As part of this, the regulation introduces new disclosure obligations because of the environmental concerns about the underlying technological architecture of certain crypto systems. More specifically, crypto-asset issuers and service providers will be required to inform users of any principal adverse impacts of the so-called consensus mechanism. Due to the extra-territorial nature of crypto-assets and their worldwide environmental impact, this paper - prepared for the "High-level Conference on the Brussels Effect of Digital Governance", which took place on 27 and 28 April 2023 at the Solvay Brussels School of Economics and Management - examines whether the new legislation and environmental information obligations will be exported globally, both de facto and de jure, in line with Anu Bradford’s ‘Brussels effect’. The key findings suggest that the strength of MiCAR’s effect will ultimately depend on a number of variables, so there is no definitive yes or no answer at this stage. From a normative perspective, in light of the policy measures adopted in other jurisdictions (ie taxation and outright prohibition), MiCAR’s disclosure-based approach appears to be the first best option for the time being, although it should be complemented by policy considerations on regulatory intervention at the protocol-level.
Keywords: the Brussels Effect, Crypto-assets; consensus mechanisms, mining, MiCA
JEL Classification: F53, G18, G28, K22, K23
Suggested Citation: Suggested Citation