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The European Union has rejected a proposal to ban the cryptocurrency Bitcoin across the union but has recommended additional measures to safeguard consumers and make mining more sustainable.
EU has no hold on crypto
Crypto-assets are now beyond the scope of EU regulation because they are neither issued nor guaranteed by a central bank or a government.
On Monday, the European Parliament’s economic and monetary affairs committee approved the proposed Markets in Crypto Assets (MiCA) framework, which would oversee digital assets in the EU.
Over the weekend, a last-minute amendment to the bill was added to prohibit the usage of cryptos that are powered by the energy-intensive method known as proof-of-work (PoW).On Monday, though, the parliamentary committee voted it down.
According to the European Parliament, this poses “risks to consumer protection and financial stability,” as well as the possibility of market manipulation and financial crime.
According to several assessments, Bitcoin’s energy consumption rivals that of entire small countries, causing significant worry about the cryptocurrency’s long-term viability.
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Vote for the legal framework of crypto-assets
MEPs voted in favour of a European Union-wide legal framework for crypto-assets. This includes precautions against market manipulation and financial fraud, as well as consumer protection measures.
MEPs have asked the European Commission to put crypto-assets mining in the EU taxonomy (a classification system) for sustainable activities by 2025, in order to lessen the cryptos’ carbon footprint.
About PoW: concerns
PoW is the process used by Bitcoin and Ethereum to confirm transactions and add new blocks to the chain.
The PoW blockchain network’s participants compete to solve a cryptographic algorithm at the same time. The algorithm is meant to become more difficult to solve as more computers attempt to solve it, implying that confirming each block in a blockchain consumes a significant amount of processing power and thus energy.
Will the EU follow in China’s footsteps?
Many nations, including China, have prohibited crypto mining due to its high energy consumption, which was increased by the country’s power outages last year.
Despite the crackdown in China, which was formerly the most popular destination for cryptocurrency miners, a new study found that Bitcoin mining has become significantly
dirtier, releasing almost the same amount of CO2 as a country the size of Greece on a yearly basis.
Several EU legislators have pushed for a ban on PoW cryptos in favor of more environmentally friendly energy sources. They have expressed concerns, however, that switching to renewable energy will mean that crypto mining will take precedence over public use.
Switching to the Proof-of-Stake model, which is considered greener because it distributes coins to users at random after they put up coins as collateral, is another option.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
