.svg)
The European Parliament’s Economic and Monetary Affairs (ECON) Committee has voted down an amendment that would have effectively banned Bitcoin and other energy-intensive crypto-assets in the trading bloc.
With 31 votes to four, as well as 23 abstentions, the European Parliament has now agreed its position for the Markets in Crypto-Assets (MiCA) regulation.
This means that the EU’s crypto regulatory framework has inched closer to implementation in the EU.
"By adopting the MiCA report, the European Parliament has paved the way for an innovation-friendly crypto-regulation that can set standards worldwide,” said Stefan Berger, member of the European Parliament and rapporteur for the legal text.
He continued: “The regulation being created is pioneering in terms of innovation, consumer protection, legal certainty and the establishment of reliable supervisory structures in the field of crypto-assets. Many countries around the world will now take a close look at MiCA."
Key provisions agreed by MEPs for those issuing and trading crypto-assets (including asset-referenced tokens and e-money tokens) cover transparency, disclosure, authorisation and supervision of transactions, while also ensuring consumers are better informed about risks, costs and charges.
In addition, the legal framework supports market integrity and financial stability by regulating public offers of crypto-assets and includes measures against market manipulation and to prevent money laundering, terrorist financing and other criminal activities.
MEPs also suggested where they want the power to be once supervision begins. Here, the European Securities and Markets Authority (ESMA) would be responsible for supervising the issuance of asset-referenced tokens, whereas the European Banking Authority (EBA) will be in charge of supervising electronic money tokens.
No Bitcoin ban in EU
One of the amendments made that had been a cause for concern among the EU’s digital finance industry in recent days was a clause that would have effectively banned mining and transactions of intensive crypto-assets, which includes Bitcoin.
Now that it is off the table for good, market participants are breathing a sigh of relief.
“I am more than relieved that the ECON committee voted against the ban of proof-of-work-based assets for EU companies in the end,” Patrick Hansen, head of strategy and business development at Unstoppable Finance, told VIXIO.
That amendment would have had dramatic consequences on the European crypto market, as it would have pushed EU consumers towards foreign, unregulated exchanges and European companies, capital and talent out of the EU, he argued.
“All without a noticeable benefit to the stated goal of sustainability,” he added.
Last week, MiCA’s rapporteur, Stefan Berger, seemed pretty certain that any such ban was off the table but the amendment did make it to a vote.
Ernest Urtasun, a senior member of the European Parliament’s left of centre green faction had tried to reassure that the proposal was not intended to ban proof of work (POW), and was more focused on ensuring that the industry adapted to climate change needs.
The amendment had also promised to allow time for such tokens to improve their carbon footprint to comply with the new rules.
“Even if, in all likelihood, that amendment would not have found its way into the final agreement, the mere symbol of the EU Parliament calling for a POW-ban would have already had a very detrimental effect on the market,” said Hansen.
A more moderate approach was ultimately taken by parliamentarians.
To reduce the high carbon footprint of cryptocurrencies, particularly of the mechanisms used to validate transactions, MEPs have asked the European Commission to present a legislative proposal to include in the EU taxonomy (the EU’s sustainability classification system) any crypto-asset mining activities that contribute substantially to climate change by January 1, 2025.
MEPs also pointed out that other industries, such as the video games and entertainment industry, as well as data centres, also consume energy resources that are not climate-friendly and called for the commission to work on legislation addressing these issues across different sectors.
“I am glad that the majority voted in favour of the alternative amendment of rapporteur Dr. Stefan Berger,” said Hansen. “Including mining into the EU sustainability taxonomy is the better solution for addressing sustainability concerns and will hopefully contribute to more and more mining activities being carried out through a renewable-only energy mix.
