Why Sustainability Disclosures Are Becoming Critical for Crypto and Digital Asset Firms
The crypto and digital assets industry has long positioned itself as innovative, agile, and disruptive. But when it comes to sustainability disclosures, many firms remain underprepared — and that gap could have significant implications for future growth.
This article follows CryptoUK’s recent member-only webinar on sustainability reporting for digital asset firms, which explored how regulatory expectations, investor due diligence and counterparty requirements are beginning to shape the disclosure landscape for the sector.
As sustainability standards become increasingly embedded across financial services, this is no longer a “nice to have.” For digital asset firms seeking institutional clients, banking relationships, investment or EU market access, it is increasingly becoming part of regulatory and commercial readiness.
Help Shape CryptoUK’s New Sustainability Handbook
To support firms in navigating what comes next, CryptoUK is developing a Sustainability Handbook for the Digital Asset Sector through its ESG Working Group. Members are invited to contribute to this work, while non-members interested in taking part are encouraged to join CryptoUK and help shape this important industry resource.
Expressions of interest should be submitted by 28 July.
The Growing Importance of Sustainability in Crypto
Across financial services, sustainability disclosures are already embedded in business operations – particularly in procurement, onboarding and client due diligence. Firms are increasingly being asked to provide environmental, social and governance (ESG) data as part of RFP processes, banking relationships and institutional counterparty assessments.
This expectation is rapidly extending into the crypto sector.
However, many digital asset firms are not yet in a position to fully understand or meet these requirements. The result? A growing risk that firms may be excluded from partnerships, financing opportunities, onboarding processes and key markets.
The immediate risk is not only regulatory non-compliance, but exclusion from procurement, onboarding, investment and market-access processes.
Why the Industry Is Falling Behind
There are several structural and practical challenges contributing to this lag:
1. Limited Sector-Specific Guidance
Most existing sustainability frameworks have been designed for traditional industries. They do not easily translate to crypto-native business models, particularly those involving decentralised or pseudonymous systems.
Key questions remain unclear:
- How should energy usage be assessed across different blockchain models?
- What does “supply chain” mean in a decentralised ecosystem?
- How should governance be evaluated in distributed networks?
- How should disclosure responsibilities be allocated between issuers, trading platforms, custodians, validators, infrastructure providers and decentralised protocols?
2. Resource Constraints
Compared to large financial institutions, many crypto firms operate with leaner teams and fewer resources. This makes it harder to dedicate time and expertise to emerging disclosure requirements.
3. Uncertainty About Material Issues
Even where firms want to act, there is often uncertainty about what actually matters. Without clear standards, companies struggle to prioritise and measure relevant sustainability metrics.
This is particularly challenging in crypto, where the material issues may vary significantly depending on the firm’s business model, the assets it supports, the infrastructure it relies on, and the jurisdictions in which it operates.
A Structural Advantage – That’s Being Missed
Interestingly, the crypto sector has a built-in advantage.
Unlike traditional industries with complex, decades-old supply chains, digital asset firms often operate with lighter, more digital-native infrastructures. This creates an opportunity to embed sustainability practices from the outset.
Yet, as a sector, we are not fully capitalising on this.
In more established industries, sustainability pressure is often driven by supply chains – large organisations requiring disclosures from their partners and suppliers. While this pressure has not yet fully materialised in crypto, it is only a matter of time.
Firms that act early will be better positioned when it does.
The firms that are able to evidence their position clearly – rather than responding reactively to each new request – are likely to be better placed in institutional due diligence, procurement and regulatory engagement.
A Complex and Evolving Regulatory Landscape
Another key challenge is the fragmented nature of sustainability requirements – especially across jurisdictions.
For digital asset firms, the issue is not one single reporting obligation. It is a layered and evolving set of expectations that may arise directly through regulation, indirectly through counterparties, or commercially through investors and institutional clients.
Three Levels of Disclosure to Consider
Crypto firms should be aware of sustainability obligations at three different levels:
1. Asset / Project Level
Unlike MiCA, the UK’s developing cryptoasset regime has not, to date, replicated a detailed asset-level sustainability disclosure framework.
However, the EU’s Markets in Crypto-Assets Regulation introduces sustainability disclosure requirements for certain crypto-asset white papers and crypto-asset service provider disclosures. These requirements may affect non-EU firms where crypto-assets are offered to the public in the EU or admitted to trading on an EU trading platform.
2. Corporate / Entity Level
At the corporate level, digital asset firms may fall within the same sustainability reporting frameworks as other companies, depending on their size, listing status, jurisdiction and group structure.
UK entities may be subject to frameworks such as existing TCFD-aligned disclosure requirements.
The UK Government has also been developing UK Sustainability Reporting Standards, based on the ISSB standards, while the FCA has consulted on aligning listed-company disclosure rules with those standards for accounting periods beginning on or after 1 January 2027.
These obligations vary depending on company size, structure, listing status and jurisdiction.
3. Indirect Requirements via Counterparties
Even if a firm is not directly required to report, it may still be indirectly impacted.
Large organisations already subject to sustainability disclosures must gather data from their partners, suppliers and clients. This means:
- Venture capital investors
- Banks
- Institutional clients
- Enterprise clients and procurement teams
…may require disclosure information as part of their own compliance, onboarding or reporting processes.
In short, sustainability expectations can reach you – even if regulation does not yet.
Missed Opportunities – And How to Avoid Them
Firms that delay action risk more than regulatory non-compliance. They also miss the opportunity to:
- Build credibility with investors and partners
- Access new markets, particularly in the EU
- Differentiate themselves in an increasingly competitive landscape
- Reduce friction in bank onboarding, institutional due diligence and procurement processes
The key is to start now.
By developing a clear sustainability strategy early, firms can:
- Stay ahead of regulatory timelines
- Meet evolving stakeholder expectations
- Avoid last-minute, resource-intensive compliance efforts
- Respond more efficiently to client, investor and counterparty disclosure requests
What We’re Seeing in Practice
There are already early indicators of what’s to come.
Under MiCA, certain sustainability indicators must be disclosed in white papers and, in some cases, by crypto-asset service providers in relation to the assets they make available for trading. These disclosures are more structured than anything currently proposed in the UK, but questions remain around data availability, proportionality and the usefulness of disclosures for early-stage or pre-launch projects.
At the same time, regulatory approaches are diverging. For example:
- The EU has introduced more prescriptive requirements
- The UK has taken a more cautious approach, choosing not to mirror MiCA disclosures
This reflects how quickly the landscape is evolving. Concerns that dominated headlines just a few years ago – such as Bitcoin’s energy consumption – are being reframed within a broader sustainability context.
For regulatory and compliance teams, the practical challenge is therefore not simply to monitor one regime, but to understand how sustainability expectations differ across jurisdictions, asset types and business models.
Why This Isn’t Yet a Priority – But Soon Will Be
Feedback from across the industry suggests that sustainability is not yet high on most crypto firms’ agendas.
This is partly historical. The sector emerged as an alternative to traditional finance, often outside of conventional regulatory frameworks.
But that is changing.
As crypto becomes more integrated into the financial system, it will increasingly be expected to meet similar standards of transparency and accountability to other parts of financial services.
And with that shift, sustainability will move up the priority list – quickly.
For many firms, the catalyst may not be a single new rule. It may be a bank, investor, exchange, institutional client or procurement team asking for information the firm is not yet ready to provide.
How Firms Can Start Preparing Today
Getting started does not require perfection – it requires awareness and action.
Here are practical first steps:
1. Assess Your Current Position
Understand what you already know – and what you don’t. Many firms are stronger in areas like governance, but weaker in environmental metrics.
This should include mapping which sustainability-related information the firm already collects, which requests it has previously received, and where responsibility for disclosure currently sits internally.
2. Identify Key Stakeholders
Consider who is likely to request sustainability information:
- Clients
- Investors
- Regulators
- Banks and payment partners
- Trading venues and other counterparties
Understanding their expectations will help prioritise your efforts.
3. Map Gaps and Opportunities
Identify where improvements are needed and where you can create strategic advantage.
This should include assessing the firm’s exposure to EU requirements, UK corporate reporting developments, investor expectations and institutional procurement standards.
4. Start Building a Framework
Even a simple internal framework can help structure your approach and prepare for future requirements.
That framework does not need to be overly complex at the outset. It should provide a clear view of material issues, data ownership, disclosure responsibilities, governance oversight and the firm’s approach to responding to external requests.
Looking Ahead
Sustainability disclosures are not a passing trend – they are becoming foundational to how financial ecosystems operate.
For crypto and digital asset firms, the question is no longer if these expectations will apply, but when, where and how.
Sustainability disclosure is becoming part of the infrastructure of financial market access. For digital asset firms, the challenge is not whether expectations will emerge, but how they will apply across issuers, crypto-asset service providers, counterparties, jurisdictions and blockchain specific business models.
Those who act now will not only mitigate risk – they will be better positioned for growth, partnership and long-term institutional credibility.
Help Shape the Sustainability Handbook
As noted at the start of this article, CryptoUK is developing a Sustainability Handbook for the Digital Asset Sector through its ESG Working Group.
The purpose of the handbook is to provide practical, proportionate guidance that helps firms understand the sustainability-related requirements, disclosure expectations and commercial considerations that are likely to affect the sector in the months and years ahead.
This work will draw on the expertise of CryptoUK members across compliance, legal, policy, sustainability, operations and digital asset markets. Participation is intended to be collaborative and hands-on, with members contributing to discussions, sharing insights and helping to shape outputs that reflect how digital asset businesses actually operate.
- If you are already a CryptoUK member and would like to contribute to the ESG Working Group, please get in touch to register your interest.
- If you are not yet a member, this is an opportunity to join CryptoUK, participate in the Working Group and help shape an important industry-led resource for crypto and digital asset firms.
To express your interest, please contact the CryptoUK team by 28 July.
