EU Parliament Rejects a Ban of Cryptos as explained by MiCA
EU Parliament Rejects a Ban of Cryptos as explained by MiCA,
This week, Bitcoin and its supporters in Europe breathed a sigh of relief.
The European Parliament’s Economic and Monetary Affairs Committee voted against a controversial provision of the proposed Markets in Crypto Assets (MiCA)
regulation on Monday, a major victory for the community. EU Parliament Rejects a Ban of Cryptos as explained by MiCA The provision, which was the MiCA draught last week, was intended to limit
the use of Proof-of-Work (PoW) cryptos such as Bitcoin and Ether due to their alleged high energy consumption.
However, before it was put to a vote, the proposal received a lot of backlash from crypto advocates all over the world.
What exactly is MiCA
The European Union (EU), a 27-nation political and economic entity, has been working on a comprehensive legislative framework
to govern digital currencies in an attempt to bring out uniform cryptocurrency regulations. The Markets in Crypto Assets (MiCA) regulation is the result of these efforts.
MiCA was the first time in 2018 to fill a regulatory void at the EU level.
The European Commission (EC), the EU’s executive branch,
adopted a Digital Finance Strategy on September 24, 2020, to promote the continent’s FinTech sector.
In addition, as part of the overall strategy, legislative proposals on crypto assets, such as MiCA.
MiCA’s goal is to “harmonise the European framework for the issuance and trading of various types of crypto tokens as part of Europe’s
Digital Finance Strategy,” according to the 168-page MiCA document.
It establishes a regulatory framework for crypto-assets and their service providers in the European Union.
By 2024, the goal is for all member states to have a single licencing regime. the Last Minute The Vote on Monday will be tumultuous.
Following an open letter from Swedish regulators requesting a bloc-wide ban on crypto mining,
the EU began focusing on the energy consumption of Bitcoin and Ethereum in November 2021.
EU Parliament Rejects a Ban of Cryptos as explained by MiCA, Following strong opposition from crypto innovators and advocates,
the proposed ban’s provisions were shortly after. Detractors argued that a ban was unnecessary .
that it would significantly reduce Europe’s competitiveness in global finance and technology.
Then, just before the Committee’s vote on Monday, a Proof-of-Work (PoW) ban reappeared in the regulatory draught, causing confusion.
What would a PoW ban have done
It might be useful to consider what a PoW ban would have meant.
The proposed ban on PoW would have had two consequences: Crypto-assets that are unsustainable will no longer be issued, offered, or admitted to trading in the future.
And for existing crypto: A phase-out plan would be transition cryptos’ consensus mechanisms from Proof of Work to less energy-intensive mechanisms such as Proof of Stake (PoS).
Pierre Person, a French legislator and member of the Law Commission, condemned the above provisions a strongly worded Twitter thread a day before the ban proposal was store.
His words can assist us in better comprehending the implications.
He explained that MiCA’s new addition amounted to a virtual ban on the two most valuable cryptocurrencies, Bitcoin and Ether,
which together account for nearly 60% of the total market capitalization.
This would make using Non-Fungible Tokens (NFTs) and Decentralized Finance more difficult (DeFi).
He reasoned that the PoW ban provisions, while ostensibly protecting citizens, would “mortify” the EU’s competitiveness
at a time when US President Joe Biden has signed orders to embrace emerging technology.
The Future of Cryptocurrency in the European Union
The community hailed the decision to remove the PoW ban provision from the MiCA legislative framework as a victory. “First stage victory in Committee at #MiCA!”
Members have paved the way for future-oriented crypto regulation by accepting my proposal.
It’s now up to the EU parliamentarian in charge of the legislative framework,
Stefan Berger, to accept the report as a whole in the final vote and send a strong signal for innovation.
At the moment, EU countries must issue their own crypto asset regulatory requirements.
However, under MiCA, all member states would be subject to a single overarching legislative framework, And a policy like this could lead to a flood of innovators flocking
to Europe to take advantage of the benefits of a larger, unified market.