EU’s MiCA Amendments For Bitcoin May Ban It And Other Major Cryptos

MiCA Amendments For Bitcoin

Welcome back to the Tribe! In this post we dive into the MiCA Amendments For Bitcoin!

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MiCA Amendments For Bitcoin

After weeks of deliberation, the EU parliament is set to vote on its major crypto regulation today. The proof-of-work clause which was removed because of its impact on major cryptocurrencies found its way back into the regulation ahead of the vote. A move that may lead to a ban on Bitcoin and other major cryptocurrencies in EU states.

The proof-of-work controversy

The bill regulating crypto and other digital assets in the EU known as the Markets in Crypto-Assets directive (MiCA) is set to be voted on today. But, there are lingering concerns that it will outlaw bitcoin and other major cryptocurrencies due to the Proof-of-work clause in the legislation.

The EU parliament scheduled to vote on the bill last month but it was delayed due to dissatisfaction from the crypto industry over the “controversial” clause. The lawmakers initially removed it due to the backlash it faced from the industry but reintroduced the clause before it will be voted on today.

According to the latest amendment to the Proof-of-work clause;

“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,”

The legislation also proposes that the European Union will be responsible for setting the standards of minimum environmental sustainability “for consensus mechanisms used for validating crypto-assets transactions.” The EU will also decide on “the date or the dates from which the requirement to comply with the minimum environmental sustainability standards takes effect, including a phase-in period.”

Crypto Industry Responds To The Bill

This bill, if voted for by the ECON will massively impact the mining and circulation of some cryptocurrencies such as Bitcoin in the EU. It has also sparked dissatisfaction among major players in the industry.

Some players in the industry feel that the bill discriminates against some technology. Ledger, a French Crypto hardware wallet manufacturer, made a statement on the bill;

“Individuals and organizations should be free to choose the technology most appropriate to their needs, policymakers should neither impose nor discriminate in favor of a particular technology. This is deeply concerning and would have serious consequences for Europe.”

Some other major players in the industry explained the implication of the bill and how it will impact cryptocurrency in the EU.

An EU MP Piere Person in a tweet responded to the bill. He said;

(1/9) MiCa regulation will be voted on next Monday. As it stands, it definitively condemns the future of crypto-assets in Europe. By banning Bitcoin and Ether, by complicating the use of NFT and DeFi, the European Parliament is mortgaging our monetary and financial sovereignty.

— Pierre PERSON (@Pierr_Person) March 11, 2022

According to him, MiCa prohibits the issuance or offering for the exchange of crypto-assets that rely on Proof-of-Work protocols. This leads to a deadly regulation that excludes Bitcoin and Ether from Europe. This action significantly breaks the principle of technological neutrality by discriminating against a particular type of technology.

He also stressed that the proof-of-work is targeted at mining activities that do not even exist in European territory. Commenting on the environmental concerns which necessitated the clause, he said;

“The issue is not the energy consumption of Bitcoin, but the origin of this energy. It would be more relevant to ban mining from fossil energies and promote players who turn to surplus renewable energy to improve the profitability of these means of production.”

This legislation comes after the US president issued an executive order regulating cryptocurrencies last week. The week also saw Dubai adopt its first set of crypto regulations and set up a regulator for the industry.

Blockchain Industry Status

The blockchain space may look like an established market due to the commonly reached 2 trillion dollar market cap, but the industry is still very much in its infancy. Reasons being are the lack of regulation, lack of uniformity and development of Web3, and delay in interoperability between chains.