Members of the European Union parliament voted down a bill that would have affected miners of several digital assets. If the law had been enforced, Bitcoin and Ethereum would have been the most affected coins.
Virtual Assets Face an Existential Threat from Legislative Change
The initiative dubbed MiCA was a prohibition on protocols that employ the proof-of-work consensus mechanism. Last month, following EU’s interest in a green finance sector, the MiCA became newsworthy.
The bill focuses on environmentally harmful processes and would impose “minimum environmental sustainability standards” on virtual assets in the EU. When news of the draft legislation first emerged, it generated considerable concern among the cryptocurrency community.
Several industry experts and pro-crypto legislators opposed the bill before it was passed. Certain persons claimed that it posed an existential risk to digital assets in its scope. While the legislation would initially have a significant impact on miners within the EU, there’s evidence that its ramifications might be felt across the entire market.
On Monday, the parliament’s committee on economic and monetary affairs considered the bill. The bill was eventually defeated after 32 members opposed it as opposed to 24 who supported MiCA.
While the committee did vote in favor of establishing a regulatory framework for digital assets, it deleted an earlier proposal that sought to ban the PoW consensus mechanism. The crypto industry has come under fire in recent years due on its use of unsustainable processes. As a result, the proof-of-work consensus method has typically been at the forefront of this fight
Proposed Ban on Energy-Intensive Proof-of-Work System
Regulators throughout the world have been targeting cryptocurrencies, especially since China’s countrywide ban. Following the crackdown on miners in the nation, increased monitoring compelled mining firms to diversify. As a result, miners moved to countries that are reliant on gas and coal, such as the United States and Kazakhstan. In contrast, China has an abundance of hydroelectric.
The de-facto prohibition on PoW coins might be regarded as a necessary measure in light of Europe’s current energy crisis. Both the most prominent cryptocurrencies, Ethereum and Bitcoin, utilize PoW technology in their mining processes. Ethereum, of course, may leave this debate by adopting the Merge to PoS voting system ahead of schedule.
The MiCA Act, which is still undergoing technical review, originally proposed a total ban of PoW tokens. However, the new version promised network improvement time for the community. In a press release, parliament member Ernest Urtasun stated that the draft bill was not intended to prohibit any important cryptocurrencies.