Cryptocalypse Averted For Now
The much anticipated EU Crypto Bill has been put forward without the reported “Crypto Mining Ban”, much to the relief of crypto enthusiasts across not only the continent, but the world.
The European Union has rejected a proposed rule that would have effectively banned Bitcoin across its member states; the Markets in Crypto Assets framework (MiCA) was voted on by the European parliament’s Economic and Monetary Affairs Committee earlier today (14 March 2022). Cryptocurrency commentators were touting last minute panic and FUD over the weekend in the run up to the vote, after a late amendment was proposed limiting the use and legality of cryptocurrencies that rely on Proof-of-Work due to energy consumption concerns. This provision was originally in the draft bill back in November 2021, before a strong backlash from the cryptocurrency community meant that the politicians backtracked and removed it, causing delays to the initial vote only for it to reappear this week.
The original and largest cryptocurrency by market cap, Bitcoin, and the largest altcoin Ethereum both rely currently on Proof-of-Work; the name of the system by which transactions are confirmed and blocks are added to the chain. As time goes by and each block becomes harder to solve, the higher the computational power needed to continue validating. There is a genuine concern across the community with the amount of energy requiring to be expended with the mining and validation of the respective blockchains, leading to other areas banning the technology such as China. This is not lost on all major players in the cryptocurrency world, with Ethereum already planning to transition to the much less energy intensive Proof-of-Stake in late 2022, with an expected reduction in energy usage of a huge 99.95%.
The bill in it’s current form passed the vote with ease, with the final tally reported to have been 31 in favour, 4 against and 23 abstentions. The leader of the Committee Dr Stefan Berger had been in opposition to the crackdown on Proof-of-Work stating on Twitter
“In view of the important debate about sustainability, my suggestion is to include crypto assets, like all other financial products … an independent discussion of the Proof-of-Work is no longer planned in MiCA” (Translated from German)
and it appears he garnered enough support from his peers.
It is still early in the process for the bill to become legislation, with larger votes, debates and amendments due to come in the coming months. For now at least, cryptocurrency mining and transactions involving Proof-of-Work blockchains are safe, and the click-bait talk of a catastrophic event leading to a sector wide crash was off the mark.
