EU votes against Bitcoin ban but drafts sustainability rules
The European Parliament rejected a regulatory proposal that would have essentially banned Bitcoin. The controversial proposal was part of the Crypto Asset Markets (MiCA) framework, which was first proposed in 2020 to provide legislation governing digital assets.
A last-minute addition to the bill was made over the weekend that would have effectively banned proof-of-work-based cryptocurrencies like Bitcoin due to concerns about how it uses energy. Proof of work is an incredibly energy-intensive process that is required to validate transactions and add new blocks to the Blockchain. Its environmental impact has come under scrutiny time and time again, and for good reason.
According to Cambridge Center for Alternative Finance , Bitcoin networks account for 95.45 terawatt hours per year. In simple terms, this means that Bitcoin consumes more energy each year than more than half of the countries in the world on an individual basis.
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This knowledge has driven people like Tesla to abandon Bitcoin and gives ammunition to countries like China that have chosen to enact a blanket ban. Ethereum is only marginally better, but developers are trying to move it to a more power-efficient proof-of-stake (PoS) model, but progress has been slow.
Europe has so far refused to go that far in banning crypto, but the settlement proposal is still moving forward without this additional proposal. The bill, which should provide EU member states with a regulatory framework for digital assets by 2025, is currently being discussed by the European Commission, the Council of the European Union and the European Parliament.
As well as debating how to make bitcoin more sustainable by reducing its carbon footprint (MPs call on the European Commission to classify crypto-asset mining in the EU taxonomy for sustainable activities by 2025 ), this bill will provide much-needed legislation to a wild audience. western industry.
Currently, cryptocurrencies are not under the control of central banks or public authorities, which means that the EU cannot legislate them. This deregulation is what makes cryptocurrencies attractive to many investors, but can also lead to “consumer protection and financial stability risks”, according to the European Parliament.
Cryptocurrency scams are commonplace. Massive losses of $770 million due to social media rackets were reported to the FTC in 2021.
In an attempt to protect consumers and safeguards against such “market manipulation and financial crimes“, MEPs voted for a uniform legal framework for crypto-assets. The bill will be put to a vote next week.