In an unusual turn of events, the EU rejects banning Proof of Work (PoW) blockchains, seemingly giving a stay of execution to Bitcoin, Ethereum and other networks which use the technology.
Today, March 14th 2022, those in the crypto world who have been paying attention to the rising legislative drive by a number of nations and supra-national governing bodies, breathed a collective sigh of relief as the European Union bureaucrats actually decided to do something which ordinary investors wanted. On the table was the Markets in Crypto Assets (MiCA) framework, which, if passed, would have limited the usage of energy intensive PoW networks in all 27 European Union member states.
The proposal was raised because many of the green-activist legislators in the EU parliament wanted to establish strict environmental standards, meaning over time a ban on the use and mining of PoW blockchains would come into effect. Whilst the world’s biggest Altcoin, Ethereum, is soon to move to a less energy intensive Proof of Stake (PoS) concensus method, it is not possible for the Bitcoin network to be changed to PoS, and thus may effectively have resulted in Bitcoin usage being illegal across most of continental Europe.
Whilst it would have been extremely difficult for this to be enforced in Europe, the ramifications of such a move would likely have seen a massive downside swing for the king of crypto’s, but happily, a majority of MEP’s (members of the European Parliament), mostly those representing more centrist and right-leaning voting blocs decided to vote against the passing of the bill.
EU rejects banning Proof of Work concensus… but kicks the can down the road
Instead, an alternative amendment put forward by Stefan Berger was accepted, which sets out a timeline for a legislative proposal to amend regulation “with a view to include in the EU sustainable finance taxonomy any crypto asset mining activities that contribute substantially to climate change mitigation and adaptation” .
What this means in practice is that the EU has decided to do what it does best… talk about things which they generally have little understanding of for a few years, and put it on the backburner for now.
Whilst Bitcoin isn’t out of the woods yet, as the EU rejects banning proof of work for now, the crypto community have indeed dodged a major bullet which did seem like it had the potential to disrupt cryptocurrency usage across the European economic zone, and would, of course, simply have placed more pointless restrictions on crypto holders.
Translation: 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 & sending out a strong signal for innovation.