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Following concerns that the EU’s crypto-asset regulation would include a mining ban, an influential member of the European Parliament has rowed back on the possibility of climate issues being incorporated into the Markets in Crypto-Assets (MiCA) law.
The European Parliament will hold a vote on its framework aimed at regulating the crypto-assets sector without any proof-of-work provisions that could have reined in Bitcoin mining in the EU.
Proof-of-work is an energy-intensive method used to validate some crypto-assets, such as Bitcoin.
“In view of the important debate about sustainability, my suggestion is to include crypto-assets, like all other financial products, in the taxonomy area. An independent discussion of the Proof-of-Work is no longer planned in the MiCA,” Stefan Berger, a member of the European Parliament (MEP) and rapporteur for the MiCA legislation tweeted in German.
As rapporteur, Berger is the MEP overseeing the European Parliament’s position on MiCA.
Elected by fellow MEPs and assigned to a parliamentary committee to draft up a report on a legislative proposal, another document from the European Commission or a particular subject, a rapporteur's key task is to analyse the project.
This includes consulting with specialists in the particular field and with those who could be affected, discussing with other members within the committee and recommending the political position to be taken, such as amendments in the text following the commission’s proposal.
In MiCA, for example, the European Parliament pushed for tighter rules on who could approve a licence for firms that issued a stablecoin, giving the European Central Bank the final say when the commission had said that this should be with national competent authorities.
Continuing his Twitter thread, Berger said that in view of the controversial discussions surrounding the energy consumption of crypto-assets, the taxonomy could provide clarity and ensure a better information basis for consumers.
The EU taxonomy for sustainable activities is a classification system established to clarify which investments are environmentally sustainable.
It came into force in 2020, with the aim of preventing greenwashing and to help investors make greener choices.
Investments are judged by six objectives: climate change mitigation; climate change adaptation; the circular economy; pollution; the effect on water; and biodiversity.
“With MiCA, the EU can set global standards. Therefore, all those involved are now asked to support the submitted draft and to vote for MiCA,” said Berger. “Strong support for MiCA is a strong signal from the EU Parliament for a technology-neutral and innovation-friendly financial sector.”
Berger continued to state that MiCA creates a crypto regulation that is a pioneer in terms of innovation, consumer protection, legal certainty and the creation of reliable supervisory structures in the area of crypto-assets, and hinted that nothing is off the table, considering that after the MEPs vote on March 14, there is still negotiations that need to take place with the European Commission and the European Council.
The Council, in particular, could be where concerns about sustainability are raised again. In January, the head of Sweden’s banking watchdog suggested that there should be an EU-wide Bitcoin mining ban.
In late 2021, the French government published a new law aiming to reduce the carbon footprint of digital technologies. This included provisions to promote environmentally virtuous digital uses, energy-efficient data centres and responsible digital strategies.
Since Summer 2021, there have been concerns from some factions in the European Parliament about crypto and its impact on climate change.
Eero Heinäluoma, a Finnish member of the Socialists & Democrats party, had called out a lack of consistency in the EU’s policies that promote high energy crypto-assets, while also setting out ambitious targets for decarbonisation.
