The European Union, consisting of 28 members, will vote today on a framework regulating crypto and discuss the concerns regarding the proof-of-work (POW) mechanism.
Speculations suggest that the vote could result in a ban of digital currencies across Europe, including Bitcoin and Ether (both of which operate using POW) for greater environmental sustainability.
In an earlier version, the framework, called Markets in Crypto Assets (MiCA), proposed a complete ban on crypto services that relied on unsustainable methods by January 2025. This provision was, however, scrapped because of extensive industry backlash.
Stefan Berger, a member of the European Parliament’s Economics Committee, announced that the bill will be voted on by the European Parliament’s Economics Committee on March 14 after the final draft is submitted.
The version being discussed today proposes a similar provision, although more leniently.
Crypto assets traded or issued in the EU “shall be subject to minimum environmental sustainability standards and set up and maintain a phased rollout plan to ensure compliance”, states the framework.
What this means is that cryptocurrencies using the energy-intensive method POW, will have to shift to the more sustainable method of proof-of-stake(POS).
While Ethereum has previously announced its plans to shift from the POW to the POS mechanism, it is unclear how Bitcoin, the largest cryptocurrency traded by volume, will shift its consensus mechanism.
The framework also states that the European Central Bank will have to “establish uniform rules for crypto-asset service providers and issuers at EU level.”
Even though this bill is a watered down version of the previous framework, the crypto community has taken to Twitter to criticize this bill and its implications.
Jake Chervinsky, the Executive Vice President and Head of Policy at the Blockchain Association tweeted
Pascal Gauthier, CEO of the crypto hardware provider, Ledger tweeted:
Regulations regarding crypto assets is the necessity of the hour, with each country moving at its own pace. From EL Salvador announcing cryptocurrencies as an acceptable legal tender to China banning Bitcoin and its increasing watch over the NFT and Multiverse market, the EU’s MiCA framework does not come as a surprise.
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