A clause prohibiting the provision of services for cryptocurrencies that use the proof-of-work (PoW) mining mechanism was recently removed from Europe’s proposed Markets in Crypto Assets (MiCA) law. The contested provision drew harsh responses from the crypto industry and community. Attempts to effectively outlaw cryptocurrencies such as bitcoin have nevertheless continued in the EU.
Amendments to MiCA offered on March 11, only days before the package is voted on by the Committee on Economic and Monetary Affairs (ECON), aim to limit cryptos as “unsustainable.” If ECON votes in favour of the proposal on March 14, when the committee is set to vote on MiCA, bitcoin-related services would be de facto removed from the scope of regulated activities.
According to sources, PoW mining is not explicitly addressed this time, but the final outcome is likely to remain the same. The new regulation states that before being issued, marketed, or permitted to trade in the EU, crypto assets should be subject to minimal environmental sustainability requirements with respect to the consensus method used for verifying transactions.
Patrick Hansen, Unstoppable Finance’s head of strategy and growth, tweeted:
1/5 The EU Parliament vote on the de facto POW-ban will take place tomorrow at 1:45-2pm CET. You can follow it via live stream.
I will also share a quick summary here on twitter.
— Patrick Hansen (@paddi_hansen) March 13, 2022
According to the analysis, the implications of a yes vote would be disastrous. A total prohibition on cryptocurrencies based on the proof-of-work idea would cripple the EU’s digital asset market, encouraging law-breaking, weakening consumer safeguards, and ultimately forcing many enterprises in the field to leave the Union.
Several member states, notably Germany, have urged a European ban on power-hungry PoW mining in recent months, citing environmental concerns. Sweden urged such a regulation, noting that the increased use of renewable energy to mint bitcoin is jeopardising other industries’ efforts to achieve climate neutrality. Non-EU countries such as Norway have expressed interest in supporting its approach.