The EU’s Market in Crypto-Assets Directive, or MiCA, is a bill that was originally scheduled to be voted on at the end of last month. However, the bill was heavily criticized by players in the crypto sector, since it would have essentially outlawed PoW crypto coins such as Bitcoin due to their heavy energy use.
Amended Bill Still Hostile
Lawmakers delayed the vote and various amendments were made to the bill. Most of the amendments focus on the proof of work issue. However, the latest version of the bill might still have a huge impact on the biggest coins, which use the proof of work algorithm.
Hostile Clauses
One clause of the amended bill states that “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.” In practice, it means that the EU will set the standards to determine the minimum environmental sustainability for the consensus mechanisms used to validate transactions.
Additionally, the law will give the EU the power to determine the date from which the requirements to comply with these standards will take effect. Once the EU decides on a date, all crypto assets that do not comply will be phased out of the 27-member bloc.
Opposition to the Bill
Not everyone is happy about the proposed bill. For instance, Pierre Person, a French Member of the European Parliament, described the bill as a “deadly regulation that excludes Bitcoin and Ether from Europe.” In Pierre’s opinion, the focus should be on the source of the energy used instead of the amount of energy used to mine BTC. For instance, he noted that renewable energy sources could use some of their surplus energy to mine BTC, which would greatly improve their profitability.
Ledger, the French crypto hardware wallet maker, also opposed the bill. In a statement from the company, they said that “Policymakers should neither impose nor discriminate in favor of a particular technology. This is deeply concerning and would have serious consequences for Europe.”
The crypto wallet maker added that a ban on PoW assets would cripple the EU while encouraging circumvention of the law. Additionally, it would worsen consumer protection and push the sector outside the EU.
Implications
Since Bitcoin and other PoW assets are decentralized, and thus not possible to control from a centralized point, they will likely continue to exist in the EU. However, they will now operate outside of regulated platforms, which will make it riskier for people to invest in these assets. Additionally, it would make it harder for law enforcement to keep track of transactions since unregulated platforms do not have to comply with data rules.
The wave of crypto regulation around the world is coming. For instance, in the US the President signed an executive order that would guide the development of digital assets in the US. It is worth noting that the EU law has yet to be signed. Before it is signed, there may still be a chance that further amendments are made.
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