EU Set to Vote on Ban of Energy Intensive Cryptocurrencies

The European Union (EU) parliament's Committee on Economic and Monetary Affairs (ECON) is set to vote Monday March 14th, 2022 on a proposed legislative framework for governing digital assets.
The framework - Markets in Crypto Assets (MiCA) - is a proposal that aims to regulate crypto assets as they currently do not fall under EU's financial services legislation, and therefore not subject to certain provisions for consumer and investor protection.

Environmental Sustainability

The draft contains a section which seeks to limit the use of cryptocurrencies powered by proof-of-work mining, an energy-intensive computing process that is the back-bone of the leading cryptocurrency - Bitcoin.

The provision requires that all crypto assets be compliant to the EU’s “minimum environmental sustainability standards" in regards to the cryptocurrency's consensus mechanism to be issued and traded in the EU. A phase-out plan is also proposed for cryptocurrencies which are already being traded in the EU to shift their consensus mechanism from the energy intensive proof-of-work to other methods that use less energy, such as proof-of-stake.

What will happen to Bitcoin and Ethereum?

Ethereum 2.0 which now has over 10million ETH staked, is Ethereum's transition to a proof-of-stake consensus, and is rumoured to be launched within the year. Bitcoin on the other hand has no such plans in place and it is unclear if such an option exists.

MiCA and the Future of Cryptocurrencies

Members of EU parliamentarians have been pushing to ban proof-of-work cryptocurrencies over energy concerns while others believe that MiCA is not the correct place for technological or energy-related regulations, as the focus of the framework is to regulate cryptocurrencies as assets.

According to people familiar with the matter, the members of the EU are split on the decision and it will come down to a close call. The outcome of the vote will hugely shape the cryptocurrency landscape in the EU, and potentially lay the groundwork or influence other countries crypto regulations such as U.S. President Biden's Executive Order on digital assets which was signed a week ago.

Crypto is the Future

We correctly predicted that regulations and policies are going to be a hot-topic this year as cryptocurrency adoption expands and is constantly on the news. Expect volatility and negative pressure to continue given the current geopolitical issue, regulations, and threats of cryptocurrency ban makes the headlines.
The cryptocurrency market will continue to grow. Regulations and policies will give it the transparency and safety to expand to the masses as interest in crypto is becoming too big to ignore.