Traders and investors await the outcome of EU crypto regulation vote

MiCA could ban exchanges from listing Proof-of-Work cryptocurrencies like bitcoin

On Monday the European Parliament will vote on legislation that could result in exchanges being banned from listing Proof-of-Work cryptoassets such as bitcoin. 

MiCA

Earlier this month, leaked drafts of the Markets in Crypto Assets (MiCA) legislation spooked the cryptocurrency sector, which feared the proposed targeting of Proof-of-Work cryptocurrencies. 

In response to the backlash, the chair of the European Parliament’s Economics Committee, Stefan Berger, postponed the vote, stating: “It is crucial for me that the MiCA report is not misinterpreted as a de facto Bitcoin ban.” This temporarily allayed concerns. 

However, with the vote rescheduled to 14 March, such anxiety returned after reports that the draft legislation still contains language that would prohibit cryptoasset service providers from transacting in PoW cryptocurrencies. 

Sustainability

The regulatory focus on the Proof-of-Work system is due in large part to the level of energy required to power it and concerns about the possible impact it has on the environment. 

Section 9b of the draft legislation will prohibit crypto-asset service providers from providing services “related in any way, shape, or form, to crypto-assets that do meet the environmental sustainability criteria”. 

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It further states: “In particular, they shall not facilitate the purchase or trading of such crypto-assets and shall not offer custody services for such crypto-assets.”

The passage and eventual implementation of the legislation could also significantly impede the activity of EU-based cryptocurrency mining firms. 

Berger

Announcing the vote last week, Berger stated that a previously-mooted independent discussion on the Proof-of Work would no longer take place. 

Still seemingly seeking to reach a compromise that would increase consumer protection and regulatory oversight while not eliminating cryptoasset innovation, Berger suggested that cryptoassets could fall under the umbrella of the EU’s Taxonomy for Sustainability. 

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