While America and India study regulations, the EU might just ban Bitcoin today
A new rule proposes to ban proof-of-work blockchains that don't meet the EU's environmental standards, which amounts to a ban on Bitcoin.
A new rule proposing to ban cryptocurrencies that exceed the European Union's (EU) environmental standards is schedule for a vote today, and it is unclear so far whether the EU parliamentarians will pass it or not.
The EU's Economic and Monetary Affairs Committee is set to vote on the proposed new crypto regulation framework entitled Markets in Crypto Assets (MiCA) today. It is meant to be an overall structure for the EU's regulation of investment in the crypto world.
However, one proposed provision within this entire framework includes that cryptocurrencies built on a proof-of-work blockchain be subject to the EU's "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 "consensus mechanism used for validating transactions" is essentially the code base of a blockchain, with cryptocurrencies largely divided between proof-of-work and proof-of-stake methods. Proof-of-work is the original method used, and has a high environmental impact for larger blockchains when it comes to creating (or 'mining') new coins.
The two biggest cryptocurrencies in the world, Bitcoin and Ethereum, are both based on proof-of-work blockchains. However, while the Ethereum blockchain has already been working on an alternate proof-of-stake method, the world still doesn't know who created Bitcoin. All we have is a pseudonym by the name of Satoshi Nakamoto. It is highly unlikely therefore that Bitcoin's mining method will change.
A previous version of the provision asked for proof-of-stake cryptocurrencies to be regulated within environmental standards by 2025, but was removed from MiCA due to backlash from the crypto community. However, this new version has been reintroduced over the last few days when the final framework was filed for the vote.
EU parliamentarians are concerned that even if the continent shifts towards renewable energy sources, they don't want excess amounts of the available energy being allocated for crypto mining rather than to the power grid where it can be accessed by all citizens.
Stefan Berger, the parliamentarian in charge of overseeing the content and progress of MiCA, told CoinDesk last month that he understood both sides of the arguments.
While he does understand the complaints that Bitcoin mining requires more energy than the entire country of Netherlands, MiCA is supposed to be a financial regulation framework and may not be the best draft for energy-related provisions.
Edited by Megha Reddy