A provision to limit the use of energy-intensive crypto assets in the EU based on proof-of-work, such as Bitcoin, has been quashed.
Cryptocurrencies such as Bitcoin have had a narrow escape in the EU parliament last evening (14 March) as MEPs voted to scrap a provision that would have banned, in effect, proof-of-work crypto assets on grounds that they are bad for the climate.
The parliament’s economic and monetary affairs committee voted 30 to 23 in favour of dropping a provision that would have made it nearly impossible for crypto assets such as Bitcoin and Ethereum from being traded in the EU because of their reliance on proof-of-work.
Proof-of-work is an energy-intensive consensus mechanism that is used by the two major cryptocurrencies to authorise crypto transactions. Many EU lawmakers have been calling to either ban or limit the use of such assets in an attempt to regulate the nascent market.
The provision was part of the markets in crypto assets (MICA) framework, a draft of which was approved at the vote last evening, which aims to establish a regulatory package to regulate crypto assets in the EU – days after an executive order in the US tried to do the same thing.
Instead of a limit on proof-of-work crypto assets, the draft focuses on protecting consumers against market manipulation, preventing financial crime and money laundering, and making crypto mining more sustainable.
‘High stakes vote’
A ban or limit on proof-of-work has long been debated in the EU amid environmental concerns as the popularity of crypto continues to rise. Some are even worried that renewable energy will be channelled to sustain crypto instead of national use.
After a couple of entries and exists from the draft in different wording, the provision was finally slipped in over the weekend just ahead of the vote.
Some proponents of crypto, such as Circlepay co-founder and CEO Jeremy Allaire, raised an alarm that the latest provision was impractical and detrimental to the crypto market in the EU.
Extremely high stakes vote in the EU. That such a proposal made it this far is extraordinarily concerning and unlikely to stand up to practical reality. https://t.co/t8xA0EnVfE
— Jeremy Allaire (@jerallaire) March 12, 2022
The provision, while not an out ban on Bitcoin and Ethereum, would have required them to transition to more sustainable consensus mechanisms such as ‘proof-of-stake’. It is understood that while it is possible for Ethereum to make that transition, it is much harder for the more popular Bitcoin.
MEP Stefan Berger said that by adopting the MICA report, the parliament has “paved the way for an innovation-friendly crypto-regulation that can set standards worldwide”.
“The regulation being created is pioneering in terms of innovation, consumer protection, legal certainty and the establishment of reliable supervisory structures in the field of crypto-assets. Many countries around the world will now take a close look at MICA,” he said.
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Original Source : siliconrepublic.com
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