Key Takeaways
- The Economic and Monetary Affairs Committee of the European Parliament has voted against a proposal that could have led to a ban on Proof-of-Work mining.
- The proposal formed part of a regulatory framework called Markets in Crypto Assets.
- The legal framework will likely advance for further negotiations, now without the proposed action against Proof-of-Work mining.
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The European Parliament’s Economic and Monetary Affairs Committee has voted against a regulatory provision that could have led to a ban on Proof-of-Work mining. This provision was part of the Markets in Crypto Assets framework, a regulatory package surrounding cryptocurrencies in the European Union.
Proof-of-Work Ban Faded
The European Parliament has struck down a provision that could have led to a Proof-of-Work mining ban.
In a 32 to 24 vote, the Economic and Monetary Affairs Committee of the European Parliament, which decides upon European Union legislation alongside the Council of the European Union, voted against a Proof-of-Work ban in the body’s crypto regulatory framework, Markets in Crypto Assets.
A draft provision suggested that crypto assets should “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.” Crypto enthusiasts feared that the wording alludes to Proof-of-Work cryptocurrencies like Bitcoin, which is known for its energy intensive mining process.
Many had decried the draft over fears of a blanket ban on Proof-of-Work-based assets for EU companies, which would affect cryptocurrency exchanges, miners, and various other firms across the industry.
However, Parliament member Stefan Berger confirmed that the house had voted in favor of an alternative draft he submitted. In a Monday tweet, he wrote:
“First stage win at #MiCA in committee! By accepting my proposal, members have paved the way for future-oriented crypto regulation. It is now a matter of accepting the report as a whole in the final vote and sending out a strong signal for innovation.”
Berger’s proposal suggested that crypto mining activities should not be legislated upon in Markets in Crypto Assets, but rather be included in the EU’s sustainable finance taxonomy. Notably, Berger was also the rapporteur of the Committee who canceled the vote on the regulatory framework on Feb. 25 over concerns with provisions that could be “misinterpreted as a de facto Bitcoin ban.”
Moving forward, the Markets in Crypto Assets bill will head to the “trilogues” of the E.U. Commission, the EU Parliament, and the Council of the EU.
Patrick Hansen, who worked on Markets in Crypto Assets regulation for several years as part of Bitkom and pushed for Berger’s proposal to be passed through, told Crypto Briefing that he was “more than relieved” that the committee voted against the ban. He said:
“[The rejected] amendment would have had dramatic consequences on the European crypto market, since it would have pushed EU consumers towards foreign, unregulated exchanges and European companies, capital, and talent out of the EU. All without a noticeable benefit to the stated goal of sustainability… I am glad that the majority voted in favor of the alternative amendment of rapporteur Dr. Stefan Berger. Including mining into the EU sustainability taxonomy is the better solution for addressing sustainability concerns and will hopefully contribute to more and more mining activities being carried out through a renewable-only energy mix.”
According to Hansen, the voters in favor of the ban have “one last option”: they could try a fast-track procedure through the trilogues in order to bring the discussion to Parliament. Only 10% of the votes are required to veto a fast-track. However, it’s likely that the Markets in Crypto Assets framework will advance without the proposed ban.
As Bitcoin and other digital assets have grown over the past year, regulators and government bodies worldwide have placed intense scrutiny on Proof-of-Work mining. While most newer cryptocurrencies use Proof-of-Stake consensus mechanisms, the biggest crypto asset—Bitcoin—uses Proof-of-Work and is unlikely to change anytime soon (Ethereum, meanwhile, will soon shift from Proof-of-Work to Proof-of-Stake). As such, a ban on Proof-of-Work would have devastating consequences for the industry. Today’s vote ensures that Proof-of-Work-based mining can continue in Europe, at least for the time being.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies.
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