Crypto Industry Relieved as European Parliament Votes Against PoW Ban

Earlier on Monday, members of the European Parliament's Economic and Monetary Affairs Committee (ECON) voted against a version of the Markets in Cryptoassets (MiCA) bill that could effectively ban proof-of-work-based cryptocurrencies across the European Union. This is huge relief for the crypto industry, whose representatives have previously warned of the threat of a tough regulatory package.

MiCA is a regulatory framework comprising 126 articles and detailed plans for the implementation of these articles by EU and member state institutions. The draft was proposed by the European Commission in 2020 as part of its Digital Finance Strategy.

MiCA covers a wide range of cryptocurrency-related topics such as the status of all major currencies and stablecoins, the operation of mining and trading platforms, with some notable exceptions such as central bank-issued digital currencies (CBDCs), securities Certificates, Non-Fungible Tokens (NFTs) and Decentralized Finance (DeFi).

The main singularity of Monday's parliamentary session was the significant difference between the two versions of the draft to be voted on. One version included language that could prohibit the operation of any cryptocurrency that relies on PoW protocols. The controversial provision would require currency providers to submit a detailed plan of their compliance with environmental sustainability standards.

In the case of Bitcoin and some other decentralized systems, since there is no existing centralized operator or individual or collective decision makers, they cannot in principle provide such details.

That is why this version of the draft was previously amended to remove this regulatory impasse. As Stefan Berger, a member of the European Parliament's Economic and Monetary Affairs Committee, assured earlier, the controversial wording should not be in the final draft.

In the end, a tougher version of MiCA did emerge, but it was not supported by a majority of MEPs. Patrick Hansen, head of strategy at crypto firm Unstoppable Finance, reported that 32 members of the ECON committee voted against the restricted version of the draft, with only 24 voting in favor. The latter minority is mainly made up of members of the Green Party and the Union for Social and Democratic Progress.

A more moderate version of MiCA will now continue its journey through the EU institutions, without any direct or implied ban on PoW mining. Instead, it has given until January 1, 2025, the European Commission, the EU’s chief executive arm, to submit a legislative proposal “aimed at bringing any cryptoasset mining activity into the EU’s sustainable finance taxonomy scheme.”

Crypto mining may still be classified as an "unsustainable" activity until January 2025, and therefore barred from receiving support and investment from European companies and governments. However, this is far from an outright ban, and the enactment of a ban could dramatically change the state of Europe's crypto space.

Next, MiCA will be reviewed by the European Parliament, the European Commission and the European Council.

UPDATE: Following the failure of the PoW ban, reporter Stefan Berger reports that MiCA has been passed in the European Parliament committee.

Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.