By
Steve Muchoki
April 19th, 2024
Further negotiations on the EU crypto bill will soon commence after the bill scaled a voting session regarding the proof-of-work method.
The proposed European Union (EU) crypto bill recently took another meaningful stride towards ratification. On Monday, the European parliament voted 31-4 (with 23 abstentions) to advance a new crypto-assets bill called Markets in Crypto Assets (MiCA). The MiCA draft also does away with language that effectively bans proof-of-work-based digital currencies like Bitcoin. According to a tweet from Stefan Berger, the European Parliament member from Germany spearheading the bill:
“In view of the important debate about sustainability, my suggestion is to include crypto assets, like all other financial products, in the #Taxonomie area. An independent discussion of the Proof-of-Work is no longer planned in #MiCA.”
Furthermore, the MiCA framework is currently on its way to further negotiations with governing EU bodies. These include the European Commission, the Council of the European Union, and the European Parliament.
Berger also touched on the potential benefits of MiCA from the perspective of the EU.
“With MiCA, the EU can set global standards. Strong support for MiCA is a strong signal from the EU Parliament for a technology-neutral and innovation-friendly financial sector,” explained he.
A Look into the Proposed EU Crypto Bill
MiCA covers the issuance and trading of digital currencies and also creates an enabling environment. In addition, the bill is seeking the expansion of crypto-centric platforms and businesses across the EU’s 27 member states. It intends to achieve this primarily by issuing licenses that would function as a passport and be valid between countries. Furthermore, MiCA also includes consumer protection rules and measures to prevent market abuse. As an official EU statement put it:
“Finally, the agreed text includes measures against market manipulation and to prevent money laundering, terrorist financing and other criminal activities.”
First introduced back in 2020, the MiCA legislation seeks to provide a regulatory framework for digital assets by 2025. Naturally, the beneficiaries of such a framework will be the member states of the EU. As a matter of fact, lawmakers and environmental activists within the union have been rallying for crypto mining regulation since last year. As part of their argument, these lawmakers cited energy-intensive crypto activity due to the proof-of-work mechanism.
For a while now, proof-of-work has come under public criticism from various stakeholders in the global crypto community over energy concerns. The general consensus is that PoW is a major facilitator of the high carbon footprint associated with digital currencies. Some EU regulators also worry that using renewable energy to sustain crypto activities instead of national grids is becoming paramount.
As part of the MiCA bill, members of the European parliament also point out that other industries also consume energy sources. Parliament members are asking the EY to look into some of the applicable industries. Examples include the video game and entertainment industry, as well as data centers.