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March 14, 2022

The EU Parliament Decides Against Bitcoin and Ethereum PoW Ban

The EU Economic Committee voted against the MiCA proposal that would effectively outlaw Proof-of-Work (PoW) crypto. It was thought over the weekend that the provision might succeed because it appeared to have majority support.

Members of the European Parliament voted against the MiCA clause, which will be considered as a significant legislative triumph for Bitcoin. The vote was 32 to 24, with 32 voting against and 24 voting in favor of the provision.

The European People’s Party, the European Conservative Party, and the Renew movement were among those that opposed the provision with a majority of legislators. Their votes would eventually outnumber those of the green and regionalist parties, the socialists and democrats, and the green left-wing parties.

As a result of this decision, Bitcoin mining would be governed by the EU Sustainable Finance Taxonomy rather than MiCA. The European Union’s RegTrax contributor Patrick Hansen noted that the “EU taxonomy is a classification system that establishes a list of ecologically (un)sustainable economic activity.” It defines which economic activities can be considered sustainable for corporations, investors, and regulators.”

He believes that under the classification, Bitcoin mining will most likely be deemed unsustainable. As a result, he anticipates that “mining corporations will have a considerably tougher time collecting money from European investors, enterprises, and governments that must spend more and more of their capital to green aims.”

In this regard, unlike the previous bill, exchanges and other crypto-service providers will not be prohibited from providing Bitcoin services in the region. “This is a significant improvement over the last compromise proposal (POW-ban),” he tweeted. Hansen anticipates that once the MiCA draft is approved by the European Commission, Parliament, and Council in the next months, it will be implemented, giving businesses six months to become compliant.

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Patrick Hansen points out that the parties to the ban still have a choice. He tweeted, “They could block a MiCA fast-track procedure through the trilogies and bring the discussion to the Parliament’s plenary.” They need one-tenth of the EP’s votes to do so, which they have.”

According to Hansen, the results of such an attempt would be unforeseeable and, as such, “should be avoided.” He recognizes that the votes may not change, but that it will “delay the regulation for at least a couple of months.”

Hansen highlighted that the argument about PoW crypto was far from done, since it will at the very least be mentioned in the taxonomy. He added that, while there was still more work to be done in the coming months and years, today “is a significant political success for crypto in the EU,” he said.