The Crypto market has once more breathed a sigh of relief from various country restrictions as the European Economic and Monetary Affairs Commission (ECON) massively voted against the initially proposed Crypto Assets legislation and banning of Bitcoin mining - which means that mining Bitcoin or Ethereum is allowed, henceforth officially permitted in Europe.
The said bill, otherwise known as MiCa, intended to ban the proof-of-work based Cryptocurrency which involves mining within the European Union. This would have crippled cryptocurrency due to the hashrate increase that supports the security of the Blockchain technology.
MiCA is a regulatory framework that contains 126 articles, including a detailed action plan for implementation by the EU and Member State institutions. The draft Bill was initially introduced to Parliament back in 2020 as part of the Digital Finance strategy.
Similarly, MiCA covers a range of Crypto-related subjects such as the status of major currencies and stablecoins, the operations of mining and exchange platforms. However, only Digital Assets issued by the Central Bank (CBDC) and other security tokens were accounted for; NFT and DeFi projects are excluded from this bill.
According to a first-hand political observer of the event, it was reported that majority members of the European Parliament from the “EPP, ECR, Renew & ID voted against it, while a minority of MEPs from Greens, S&D, and GUE mainly voted in favour”. Total of 32 votes rejected the bill, while only 24 were in support.
On the contrary, the MEPs supported an alternative amendment from Stefan Berger, a German economist and politician of the Christian Democratic Union [CDU].
Implications of the Bill on Bitcoin and Crypto mining in Europe
Monday, 14th March will remain a significant day in the journey of Crypto legislation across Europe. A number of European Union parliamentarians rejected the motion for Crypto Markets Assets [MiCA] legislation suggesting a ban on the mining process. Of course, mining is fundamental for all Blockchain technology development and security as the network's security is heavily built on Bitcoin hashrate development.
The bill passed by the EU's legislative body for regulating digital assets in its draft was designed to limit the use of cryptocurrencies powered by energy-intensive computing processes, also known as proof-of-work [PoW] in Europe. However, Crypto mining was vindicated and supported by the majority votes cast by the European Parliament today. Many would consider this the first step towards an official Cryptocurrency legislation within Europe.
However, upon examining bill provisions, crypto assets will be subjected to the EU’s “minimum environmental sustainability standards concerning their consensus mechanism used for validating transactions, before being issued, offered or admitted to trading in the Union”.
Nonetheless, the recently rejected bill will enable cryptocurrencies, ie. Bitcoin and Ethereum, currently traded in the EU, to shift their consensus mechanism from PoW to proof-of-stake (PoS), suited for Cryptocurrency hashrate development.
With Parliament finally voting against the de-facto PoW ban with good margin, level ground has been established for Bitcoin legalisation in Europe. Furthermore, the space opened an opportunity for discussions on regulating crypto-assets.
Above all, the MiCA draft no doubt will be negotiated during a trialogue between the EU Commission, Parliament, and council next week. If approved, the law will come into effect within months, and crypto companies will be offered a six months grace period for transition to comply with the updated requirements.
Therefore, it can be widely agreed that the path towards legalising Bitcoin and other Cryptocurrencies within the EU still remains bright.