The European Parliament voted 32-24 against the final version of the European Union bill that sparked controversy over its alignment with the cryptocurrency industry’s Proof-of-Work (PoW) consensus mechanism.
The Markets for Crypto Assets (MiCA) bill, which has been under discussion since 2020, finally will not include article 2a that the community was so concerned about and that revolves around digital mining.
“It is a great relief and political success for the bitcoin community and for the European Union,” he pointed on Twitter the member of the bitcoiner community, Patrick Hansen.
The proposal establishes a regulatory framework for the cryptocurrency industry through a licensing regime throughout the continent and a single regulation for member states. However, it also contemplated a controversial provision that raised to limit the use of proof-of-work (PoW) cryptocurrenciessuch as Bitcoin (BTC) and Ether (ETH).
According to the CriptoNoticias glossary of terms, proof of work is a distributed consensus protocol in which transactions are processed by proving possession of the cryptocurrencies themselves. However, this mechanism has been the subject of intense scrutiny by a group of EU legislators who have been voicing energy concernsnoting that PoW requires high power consumption.
This controversial section of the legislation was later removed following industry backlash. At that time the paragraph in question had been removed, but the final decision on its inclusion would be put to a vote on Monday.
version of a new draft had introduced a similar provision to the previously deleted onebut significantly attenuated with respect to the original, according to several parliamentarians, as reported by CriptoNoticias.
The new provision established that “crypto assets will be subject to minimum standards of environmental sustainability with respect to their consensus mechanism used to validate transactions, before being issued, offered or admitted to trading in the Union.”
“Crypto-assets that are issued, offered or admitted to trading in the Union shall establish and maintain a gradual implementation plan to ensure compliance with said requirements”, tweeted Patrick Hansen, citing portions of the draft document.
“Since there is no way that Bitcoin can implement a plan outside of PoW, this will affect the cryptocurrency,” added Hansen, who has closely followed the process around the MiCA Act.
The provision also said that energy-intensive crypto assets, which are already in use in the EU before PoW consensus mechanisms, should only be applied on a “small scale”. Although until now it is unknown what would be the bases that will establish that small scale.