The European Parliament’s economic and monetary affairs committee has voted to exclude the provision in the Markets in Crypto Assets (MiCA) framework that would have banned proof of work mining.
At the same time, the committee passed an amendment, Article 2a, to add digital currency mining to the European Union (EU) sustainable finance taxonomy, which means that digital asset mining won’t be addressed in the MiCA framework but will be kicked down the road and dealt with by January 1, 2025, in a proposal presented to the European Parliament and Council.
MiCA and the EU sustainable finance taxonomy
MiCA is the EU’s legislation for governing digital assets. In early February, the chair of sustainable finance at The International Organization of Securities Commissions (IOSCO) proposed a proof of work (PoW) mining ban in the European Union via a proposal in MiCA.
The proposal was supposed to go to a vote on February 28; however, Dr. Stefan Berger, a member of the European Parliament says the vote was canceled last February 25 at his request.
Die Abstimmung des EU-Parlaments zu #MiCA wird auf meine Forderung hin abgesetzt und nicht am 28. Februar stattfinden. Als Berichterstatter ist es für mich zentral, dass der MiCA-Bericht nicht als de-facto #Bitcoin-Verbot missinterpretiert wird @btcecho 1/4
— Stefan Berger (@DrStefanBerger) February 25, 2022
Dr. Berger feared that the proposal would lead to a de facto ban of all blockchain networks that use PoW mining instead of creating a productive framework around the energy consumption of blockchains.
“The alternative language to effectively phase out proof-of-work consensus protocols added to the EU MiCA Regulation clearly demonstrated a concern for the need of utility-driven blockchain innovation. The measure would have potentially removed access to advancements in data security that a scalable Proof-of-Work consensus mechanism delivers, and blockchain requires,” said Bryan Daugherty, Public Policy Director for BSV Blockchain.
“By overlooking a scalable proof-of-work blockchain such as BSV, policymakers are disregarding sustainable solutions that provide the stability and security, that blockchain uniquely provides, without compromise, and more efficiently than its legacy financial and information security counterparts,” Daugherty added. A recent report by Canadian accounting firm MNP has confirmed that BSV blockchain had proven itself the most efficient blockchain among the many blockchain projects out today, based on both its data models and real-world research.
After the February 28 vote was canceled, Dr. Berger met with stakeholders to create a proof-of-work energy proposal that does not threaten the existence of proof of work blockchain networks, Article 2a, the amendment that pushed digital currency mining from being an issue addressed in MiCA to an issue that falls under the umbrella of the EU’s sustainable finance taxonomy; a classification and regulation system with six environmental objectives:
- Climate change mitigation
- Climate change adaptation
- The sustainable use and protection of water and marine resources
- The transition to a circular economy
- Pollution prevention and control
- The protection and restoration of biodiversity and ecosystems
The taxonomy has a significant impact on where enterprises and individuals can invest their money and subsidies.
What will happen to MiCA?
Proof of work mining has won a significant battle in the EU parliament, but the war is far from over. Thanks to the March 14th vote, the MiCA framework will run its course in parliament without a proposal to ban PoW mining, but proof of work mining will still have to be addressed within the next three years in regard to the EU’s sustainable finance taxonomy.
“Next in the EU, the MiCA Regulation will go to Plenary where it will continue to be debated before making its way towards the Trilogues. This is a phase in which the European Union Commission, the European Parliament, and the EU Council try to reach agreement on a joint text,” said Daugherty.
“A roadmap through the EU’s sustainable finance taxonomy seems to in theory benefit a scalable Proof of Work protocol such as BSV, but it will be important to closely monitor the legislative process of MiCA Regulation and other similar pieces of legislation globally, to ensure a balanced approach to regulation without stifling innovation and advancements in data security and finance.”
Creating blockchain laws and regulations
Thanks to Dr. Stefan Berger, proof of work mining lives to see another day. As blockchain and digital assets become increasingly popular, we will need more lawmakers that are knowledgeable when it comes to blockchain and digital assets so that the legislative frameworks they create support sustainable growth without throttling innovation in these emerging industries.
“It is now more important than ever to actively engage policymakers who are considering the ban of Proof of Work—especially based upon ‘Bitcoin’ Core (BTC) as the benchmark for sustainability. This will require a great deal of direct outreach to policymakers explaining the differences in security, stability, sustainability, and overall global utility beyond the limited perspective of a ‘store of value’ or strictly as a tradeable asset,” said Daugherty.
“Navigating a complex system of blockchain and digital ledger technologies is not an easy feat. A framework is required to identify the interrelationships and understand the whole and the parts of the system at the same time. Helping government agencies navigate the digital assets space, delineate ‘Crypto’ from ‘Blockchain’ and empowering them with first-hand knowledge and understanding of blockchain utility will be key. I strongly believe that policymakers must strive to synchronize their strategic review approach with a balanced focus on security, stability, and sustainability,” he added.
Watch: CoinGeek New York panel, How to Achieve Green Bitcoin: Energy Consumption & Environmental Sustainability
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