Changes to the EU’s MiCA proposal to regulate crypto markets, announced just days before the package’s vote, suggest that a bitcoin ban is still a possibility. Despite the removal of language that would have prohibited coins with energy-intensive mining, some European Parliament members are now targeting “unsustainable” cryptocurrencies.
A section of Europe’s Markets in Crypto Assets (MiCA) draft legislation prohibiting the provision of services for cryptocurrencies based on the proof-of-work (PoW) mining method was recently removed. The contentious provision had elicited negative responses from the crypto community and industry.
However, attempts to effectively ban cryptocurrencies like bitcoin in the EU have continued. Amendments to MiCA proposed on Friday, days before the Committee on Economic and Monetary Affairs (ECON) votes on the package, aim to restrict cryptos classified as “unsustainable.”
The German crypto news outlet BTC Echo reported that PoW mining is not specifically mentioned this time, but the end result is likely to be the same, the German crypto news outlet said. The new provision reads: “Crypto assets shall be subject to minimum environmental sustainability standards with respect to their consensus mechanism used for validating transactions, before being issued, offered, or admitted to trading in the Union.”
Such cryptocurrencies, according to the authors of the amendments, shall be compliant with sustainability requirements. If the proposal is backed by ECON on Monday, when the committee is scheduled to vote on MiCA, bitcoin-related services will be de facto excluded from the scope of regulated activities. Patrick Hansen, head of strategy and growth at Unstoppable Finance, tweeted:
1/8 Bad news for #bitcoin & #cryptocurrency in the EU 🚨
The POW-ban has basically made its way back into the draft of the European Parliament that will be voted on in the committee on Monday.
I just read the latest draft. A quick update 👇@balajis @_pgauthier @BrianBrooksUS
— Patrick Hansen (@paddi_hansen) March 12, 2022
The consequences of a positive vote would be devastating, the report notes. A complete ban on cryptocurrencies based on the proof-of-work concept would paralyze the digital assets market in the EU and encourage the circumvention of laws, weaken consumer protections and ultimately force many businesses in the industry to move out of the Union.
In the past few months, officials and regulators from several member states, including Germany, have called for a European ban on power-hungry PoW mining, citing environmental reasons. Sweden insisted on such a measure, warning that the increasing use of renewable energy to mint bitcoin comes at the expense of climate neutrality goals in other sectors. Non-EU countries like Norway have been considering backing its stance.