European Parliament Votes Against PoW Ban, Offers Huge Relief to Crypto Industry

Earlier on Monday, members of the European Parliament’s Committee on Economic and Monetary Affairs voted against a version of the Markets in Crypto Assets, or MiCA, account that could have effectively banned proof-of-work-based cryptocurrencies within the EU. This comes as a huge relief to the crypto industry, whose representatives had previously warned of the threat of a hardline regulatory scenario.

MiCA is a regulatory framework that: contains 126 articles and a detailed plan for their implementation by the EU institutions and the Member States. The concept was introduced by the European Commission in 2020 as part of its Digital Finance strategy.

MiCA covers a wide range of crypto-related topics such as the status of all major currencies and stablecoins, the operations of mining and exchange platforms – with some notable exceptions such as digital currencies issued by central banks or CBDCs – security tokens, non-fungible tokens, or NFTs and decentralized finance, or DeFi.

The main intrigue of Monday’s parliamentary session was the significant differences between two versions of the draft to be voted on. One of them contained language that could prohibit any operation with the cryptocurrencies that rely on the proof-of-ork or PoW protocol. The problematic line would require currency providers to submit a detailed plan for their compliance with environmental sustainability standards.

In the case of Bitcoin (BTC) and some other decentralized systems, such details could in principle not be provided, because there is no existing central operator or an individual or collective decision maker.

Therefore, this version of the concept has been previously corrected to overcome such a regulatory deadlock. As Stefan Berger, member of the European Parliament’s Committee on Economic and Monetary Affairs, previously assured, the problematic language was not allowed to appear in the final draft.

In the end, the hardline version of MiCa appeared on the floor, but was not supported by the majority of MEPs. Like Patrick Hansen, head of strategy at crypto firm Unstoppable Finance reported, 32 members of the ECON committee voted against the restrictive version and only 24 voted in favour. The latter minority consisted largely of the members of the Green Group and the Progressive Alliance of Socialists and Democrats.

The more moderate version of MiCA, which will now continue its journey through the EU institutions, contains no direct or implied ban on PoW mining. Instead, it mandates the European Commission, the EU’s highest executive body, to submit a legislative proposal by January 1, 2025 “with a view to including in the EU taxonomy sustainable financing of all crypto assets.” mining activities”.

Crypto mining can still be classified as an “unsustainable” activity before January 2025, excluding support and investment from European companies and governments. However, this is far from an outright ban, the enactment of which could have drastically changed the state of crypto in Europe.

The next step for the MiCa is a three-pronged consideration by the European Parliament, the European Commission and the Council of the European Union.

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