After weeks of deliberations, the European Union voted against the ban on proof-of-work mining on Monday, 14th March 2022. There has been an existing debate over the need to ban the activities of crypto miners within the EU. The proposed European Markets in Crypto Assets (MiCA) framework, needed to be assented to help the EU take its stand on digital assets. The economic and monetary affairs committee of the parliament was scheduled to vote on Monday on the proposed rule. However, over the weekend, a last-minute adjustment was made to the bill with the aim of limiting the use of Cryptos that are powered by the energy-intensive process called proof-of-work (PoW).
The 59-member Economic and Monetary Affairs committee met to vote and take a stand for or against the ban and the result of the voting exercise yesterday, 14th March 2022, revealed that the majority of the Economic and Monetary Affairs committee members stood against the ban. 30 members of the Committee voted against the ban, 23 voted in its favor, and six members remained neutral, therefore, the ban could not pass.
Russia’s invasion of Ukraine, and several other factors contributed to this standpoint. Some of the EU's high-profile individuals even pushed for the urgent approval of the EU’s crypto regulatory framework, Markets in Crypto Assets (MiCA). The ECB President, Christine Lagarde, is one of the prominent proponents for the approval of MiCA. The effect of the ban on Proof of Work mining would have relegated Europe in the drive towards innovation within the global financial systems. By implication, Bitcoin (BTC) and Ethereum (ETH) would have lost legality and relevance in the European Union.
The result of the vote led lawmakers to the conclusion 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.” The Markets in Crypto Assets (MiCA) framework proposed that bitcoin and other energy-intensive cryptocurrencies would need to “set up and maintain a phased rollout plan to ensure compliance with such requirements."
With this development, the onus lies with the Lawmakers to decide the classification of sustainable investment that Cryptocurrency investment will be categorized as. Anthony Cuthbertson stated that the draft proposal would have been ‘mortifying for our competitiveness’. Stefan Berger, a EU Parliament member tweeted “First stage win at MiCA committee. By accepting my proposal, members have paved the way for future-oriented crypto regulation. It is now a matter of accepting the report as a whole in the final vote and sending out a strong signal for innovation.” Meanwhile, the parliamentarians who voted for the ban made a claim on the effect of Bitcoin mining on the environment. They argued that it could result in "risks for consumer protection and financial stability" and could lead to market manipulation and financial crime.
In conclusion, the European Union has rejected the proposed rule that pushed for the ban of cryptocurrency mining activities. It however, drafted new rules that protect the interest of consumers and ensure the safety and sustainability of the mining market.
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