Bitcoin Wins In Europe As EU Parliament Committee Rejects Proposal Limiting Proof-Of-Work

Bitcoin Wins In Europe

Welcome back to the Tribe! In this post we are going to discuss the recent victory for cryptocurrency where Bitcoin wins in Europe.

Nothing should be considered investment or financial advice. Enjoy the ride!

Bitcoin Wins In Europe

The EU parliament yesterday rejected the proposal limiting proof-of-work in a closely won vote. The clause raised a lot of eyebrows from people in the industry because of the threat it poses to Bitcoin and other major cryptocurrencies. Despite this temporary victory, it is still a long road ahead for cryptocurrencies in Europe.

The Proof-of-work clause

The clause limiting Proof-of-work has been a point of contention since the bill was introduced in 2020 to establish a regulatory framework for bitcoin and other cryptocurrencies. It was struck out of the bill after complaints by major players in the industry but was reintroduced just before it was voted on. The clause states that:

“Crypto-assets shall be subject to minimum environmental sustainability standards with respect to their consensus mechanism used for validating transactions, before being issued, offered or admitted to trading in the Union,”

This means that the EU will decide the minimum environmental sustainability standards of a crypto asset before being accepted in Europe. A move that would potentially ban Bitcoin and other major cryptocurrencies.

The Vote

The EU Committee on Economic and Monetary Affairs (ECON) voted against the clause banning proof-of-work in a vote that ended 30-23 in favor of removing the clause. The committee also passed a new amendment proposed by Stefan Berger (the rapporteur of MiCA) that adds cryptocurrency mining to the EU sustainable finance taxonomy.

The amendment states that:

“ By 1 January 2025, the Commission shall present to the European Parliament and to the Council, as appropriate, a legislative proposal to amend Regulation (EU) 2020/852, in accordance with Article 10 of that Regulation, with a view to including in the EU sustainable finance taxonomy any crypto asset mining activities that contribute substantially to climate change mitigation and adaptation.”

An official press release by the European Parliament shows that despite the rejection of the Proof-of-work clause, the broader MiCA legislation was approved with 31 votes to 4 and 23 abstentions. In addition to requiring a legislative proposal to include any cryptocurrency mining activities “that contribute substantially to climate change” in the EU taxonomy for sustainable activities, MiCA defines regulatory agencies to oversee the Bitcoin and cryptocurrency markets, “supports market integrity and financial stability,” and “includes measures against market manipulation and to prevent money laundering, terrorist financing and other criminal activities,” per the release.

Reactions to the outcome of the vote

Stefan Berger a member of the EU Parliament and rapporteur of MiCA tweeted that:

“First stage win at #MiCA in committee! By accepting my proposal, members have paved the way for future-oriented crypto regulation. It is now a matter of accepting the report as a whole in the final vote & sending out a strong signal for innovation.”

Erster Etappensieg bei #MiCA im Ausschuss! Mit der Annahme meines Vorschlags haben die Mitglieder den Weg geebnet für eine zukunftsorientierte Krypto-Regulierung. Nun gilt es, den Bericht auch als Ganzes in Schlussabstimmung anzunehmen & starkes Signal für Innovation zu setzen.

— Stefan Berger (@DrStefanBerger) March 14, 2022

The proposal was the compromise that stalled the move to implement the Proof-of-work ban on crypto assets. But this is not the end of the road for crypto regulation in Europe, rather the journey just started.

The Road Ahead For Crypto Regulation

Despite the outcome of the vote, crypto regulation still faces a long legislative road ahead. The document voted on is still the draft that will go through some legislative process before implemented.

The draft proposal contains hundreds of amendments, and the Committee needs to decide if all of them are accepted, or alternatively, which ones are. If the Committee fails to adopt the draft report, it will mean going back to the drawing board to further discuss the proposed amendments.

Alternatively, if the text is adopted, as it would be expected at this stage, the Committee will also vote on whether to start interinstitutional negotiations.

Binance In Middle East

Leading cryptocurrency exchange Binance has received regulatory approval from the central bank of Bahrain to kick start operations in its jurisdictions as a digital asset service provider. Binance also won an anchor license from the Dubai World Trade Centre as well.

The move comes after Binance reportedly amped up efforts geared towards achieving improved regulatory compliant practices on a global scale.