The EU Parliament Approves Crypto Legislative Package by Majority Vote

The EU Parliament Approves Crypto Legislative Package by Majority Vote

 

The European Parliament's Economic and Monetary Affairs Committee (ECON) had detailed deliberations on the proposed Markets in Crypto Assets Regulation (MiCA), which is being heralded as a landmark piece of legislation aimed at coordinating the European Union's approach to crypto.

ECON today rejected variants of the legislative package that included a "de facto" prohibition on proof-of-work crypto currency mining, which is employed by crypto currencies like as Bitcoin and Ethereum. 

"There were two alternative compromises that were related to this watered down version of the ban of unsustainable protocols. These kinds of compromises containing this de facto ban on unsustainable mechanisms were rejected, "an unnamed advisor involved in the negotiations told Decrypt on a phone call.

"The suggestion that sparked the mobilisation will not be included in the MiCA text," the advisor said, referring to the crypto industry's overwhelming opposition to any potential restriction on proof-of-work blockchains. For quite some time, the EU's proposed crypto regulatory framework has sparked a debate.

Originally, a component of the legislative package required proof-of-work blockchains to "meet basic environmental sustainability requirements" before they could be mined, transferred, or utilised within the EU's borders.

The phrasing of the document did not sit well with several EU legislators. However, the vote was postponed due to concerns that the package had been "misinterpreted as a de facto Bitcoin prohibition," according to Stefan Berger, chairman of the European Parliament's Economics Committee. Today, EU lawmakers rejected a new, watered-down version proposed by the European Green Party, which Decrypt identified as the original document.

"Before being issued, marketed, or admitted to trading in the Union, crypto assets shall be subject to minimal environmental sustainability requirements with respect to their consensus method used for validating transactions," the updated proposal stated.

Proof-of-work Crypto mining used by some of the biggest cryptocurrencies like Bitcoin and Ethereum has long generated scrutiny from environmentalists. Cambridge University, sources reveal that Bitcoin consumes more electricity per year than most countries in the world. This can translate to a hefty carbon footprint, depending on the energy sources used. Earlier, research conducted by Decrypt has found that Bitcoin mining’s greenhouse gas emissions are broadly equivalent to 60 billion pounds of burned coal.

"We think it’s not a good thing. "We hoped to have something in the legislation that would at least open the debate and our discussion on some measures that could address the environmental impact of crypto assets," the advisor told Decrypt today.

Meanwhile, Alex de Vries, founder of Digiconomist, told Decrypt that today's vote "probably won’t be the last time we see authorities contemplating how to deal with this." The reality is that the Bitcoin industry has no plans to do anything about it. So these numbers aren’t going to get better by themselves.".

ECON has simply voted to accept the legislative package's language so far, not whether or not to adopt MiCA. It is also being discussed whether, if MiCA passes ECON, it will need to be agreed upon after more discussions with the European Commission and the European Council.

The Markets in Crypto Assets Regulation (MiCA) legislation package, which attempts to harmonise the EU's regulatory approach to the crypto business, has been approved by the European Parliament's Committee on Economic and Monetary Affairs (ECON).

The bill does not include anything about a planned ban on proof-of-work mining, which was described as a "de facto Bitcoin prohibition" after an earlier vote on Monday. The bill passed the ECON committee by a 31-23 vote, with four people abstaining.

According to the MiCA package text, one of the key aims of the legislation is "ensuring that the EU financial services regulatory environment is innovation-friendly and does not obstruct the adoption of new technology."

According to the legislation, a robust legal framework is required for crypto-asset markets to flourish within the EU, explicitly outlining the regulatory status of any crypto-assets that are not covered by existing financial services legislation. MiCA also wants to "promote innovation," "implement adequate levels of consumer protection and market integrity," and "maintain financial stability."

The stable coin market is also linked to the final point concerning financial stability. The authors of MiCA feel that the crypto market does not currently constitute a threat to financial stability, but that is likely to change in the near future as a result of the stable coins:

"This may change with the advent of ‘global stable coins,’ which seek wider adoption by incorporating features aimed at stabilising their value by exploiting the network effects of the firms promoting these assets."

In some ways, the MiCA legislative package reads like President Biden's recent crypto executive order in the U.S.: a call to action for all regulators and agencies to come together on a plan for regulating crypto and protecting consumers.