The Markets in Crypto Assets (MiCA) legislation contained a clause promising to allow cryptoassets to trade or spend within the bloc “subject to minimum environmental sustainability standards.”
A proposal that would have effectively banned the mining and transactions of energy-intensive cryptocurrencies such as Bitcoin in the European Union has not been approved by a parliamentary committee as the bloc continues to regulate the burgeoning sector.
The EU’s Economic and Monetary Affairs Committee voted Monday on a final draft of the Markets in Crypto-assets (MiCA) legislation, which included a clause promising that cryptoassets within the bloc will be traded or issued “subject to minimum environmental requirements.” sustainability standards”. A final count of the committee’s votes showed that the proposed clause was rejected by 23 votes in favour, 30 against and six abstentions.
Crypto industry experts said the proposal would have acted as a de facto ban on cryptocurrencies such as Bitcoin and Ether, which operate using a “proof-of-work” consensus mechanism and require large amounts of energy to mint tokens and transact. to capture. However, the proposal had promised to give such tokens time to improve their carbon footprint to comply with the new rules. An earlier version of MiCA had suggested banning proof-of-work tokens completely.
Ernest Urtasun, shadow rapporteur on the MiCA legislation and a member of the European Parliament within the Greens/EFA faction, said the proposal was not intended to enforce a ban on proof of work tokens like Bitcoin. “It wasn’t that simple. Our proposal was more complex and more mindful of the industry’s need to adapt,” he said.
The committee passed a separate proposal to add cryptocurrency mining to the EU sustainable finance taxonomy, which would determine whether crypto can be considered a sustainable investment. MiCA now needs to be approved by the EU’s executive, as well as EU member states and the full European Parliament before it can become law. Bitcoin, Ether and other cryptocurrencies traded shortly after the vote.
Crypto energy consumption is a hot topic. Industry supporters say environmental impacts can be mitigated by encouraging miners to use renewable energy sources, but demand for Bitcoin and other tokens has significantly increased their carbon footprint over the past year. Data from the Cambridge Center for Alternative Finance estimates Bitcoin’s estimated power consumption in early 2022 at an annual rate of 138 terawatt hours, more than the size of a country like Norway.
“Bitcoin has won that vote,” said Michael Saylor, chief executive of software company MicroStrategy, during a webinar hosted Monday by the Economic Club of New York. “You need energy to create real estate.”
Markus Ferber, a lawmaker and spokesman for the EPP Group on the committee, said the failed proposal sent a “clear signal” that the EU wants to support the crypto industry as it grows.
“Banning proof of work would mean the EU would become crypto-nobody land,” Ferber said. “If we want to drive innovation, we need to be open to new technologies, not ban them.”
– With help from David Pan.