The European Union has rejected a draft rule that would have made it illegal in Europe to mine proof-of-work (PoW) based cryptocurrencies like bitcoin (BTC) and ether (ETH), among others. According to reports on March 14, 2022, the Regulation on Markets in Crypto Assets (MiCA) bill, which aims to stimulate digital asset innovation in the region, gained the support of 31 MEPs while 23 voted against it.
Bitcoin’s Value Has Increased Significantly Regulatory Obstacle in the EU
Bitcoin, the world’s most popular cryptocurrency, has weathered a big scare in Europe, as a plan to severely restrict the usage of proof-of-work (PoW) based cryptocurrencies failed to garner enough traction among European Union politicians.
A last-minute amendment to the Regulation of Markets in Crypto Assets (MiCA) law was presented by the Greens and the S&D parties. The modification was intended to effectively prohibit energy-intensive proof-of-work (PoW) cryptos such as bitcoin.
According to a tweet thread by Patrick Hansen, head of strategy & growth at Unstoppable Finance, on March 14, 2022, 32 members of the European Parliament’s Committee on Economic and Monetary Affairs (ECON) voted against the PoW ban, while 24 voted in favor.
New Rules Have Been Adopted
Rather than explicitly banning the PoW consensus method that drives bitcoin and other crypto assets, an alternative amendment offered by Dr. Stefan Berger was approved, thereby eliminating PoW mining from the MiCA regulatory framework but including it in the EU sustainable finance taxonomy.
Because MiCA is primarily concerned with regulating financial products and financial service providers, Hansen believes it is more appropriate to address any concerns about the long-term viability of PoW mining technology separately.
The Economic and Monetary Affairs Committee of the European Parliament voted 31-4 favor the MiCA regulatory framework, with 23 abstentions, to boost consumer trust and support the growth of digital services and alternative payment instruments.
Transparency, disclosure, authorization, and oversight of transactions are among the main provisions agreed upon by MEPs for crypto market participants. By establishing a type of license that would be valid throughout the EU, the framework also promises to make it easier for crypto enterprises to expand their activities.
The MiCA draft will be negotiated in a trilogue between the EU Commission, Parliament, and Council in the next months, after which the rules will be fully implemented, and crypto businesses will be allowed a six-month grace period to begin functioning in conformity with the new legislation.