cryptocurrencies: EU law to the vote

A final version of a major cryptocurrency industry bill in the EU went to the vote.

• by Alice Zaniolo

• March 15, 2022

A final version of a major EU bill, which sparked controversy over its targeting of the cryptocurrency industry's proof-of-work (PoW) consensus mechanism, went to the vote.

The Markets in Crypto Assets (MiCA) bill, introduced in 2020, seeks to strengthen regulation on digital assets. It does this by establishing a licensing regime on the continent and simplifying a uniform set of rules for member states.

These regulations include transparency and disclosure requirements for the issuance of digital assets, the authorization and supervision of cryptocurrency service providers, consumer protection regulations and measures to prevent market abuse.

The bill, under paragraph 61 (9c), previously also sought to establish a framework that prohibited crypto services from using PoW-based cryptocurrencies such as bitcoin and ether. That section of the legislation, which has since been updated, was supposed to go into effect in 2025.

Cryptocurrencies and regulation: a not-so-recent topic anymore

Lawmakers and environmental activists have pushed for cryptocurrency mining regulation. The protests since at least November last year, citing what they considered an energy-intensive cryptographic business deriving from PoW.

Following a notable public outcry and the condemnation of the potentially blunted financial innovation bill across the region, the law was postponed indefinitely on February 28.

In view of the important debate on sustainability, my suggestion is to include cryptocurrencies, like all other financial products, in the taxonomy area.

tweeted Stefan Berger, a member of the European Parliament from Germany, on Tuesday.

Berger, who is in charge of overseeing the bill, presented the final text last week.

To pass legislation within the EU, the Parliament, representing European citizens, and the Council, representing the governments of the 27 EU Member States, must reach agreement on an identical text of a given bill .

The process is often time-consuming and fraught with setbacks; each member has more or less the same say in matters affecting the region as a whole.

Doubts remain

Some observers remain wary. This is because the document still states that cryptocurrencies "will be subject to minimum environmental sustainability standards". At least that's what Patrick Hansen, head of growth at Unstoppable Finance, pointed out in a Tweet on Sunday.

Hansen argues that while the wording for PoW has changed, "the effect is essentially the same".

Existing cryptocurrencies:

They must establish and maintain a phased implementation plan to ensure compliance with these requirements.

Hansen tweeted, citing parts of the draft document.

The moderately more compatible language with cryptocurrencies in the current version of MiCA that will likely not be voted on by the committee is a marked improvement over the original text, which Hansen previously described as a suicide proposal.

It would kill the entire European crypto industry, the only sector that fully aligns with European values and where the EU could actually be competitive.

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