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Jafrin Ahmed
Mar 14, 2022
by Jafrin Ahmed

EU’s MiCA Vote Today Could Ban Proof-of-Work Cryptocurrencies

EU's MiCa proof-of-work

Table of contents

  1. New Amendments on EU Crypto Legislation
The latest draft of the European Union's (EU) Markets in Crypto Assets (MiCA) report still contains a provision that could limit the usage of proof-of-work cryptocurrencies. The proposed crypto legislation or the MiCA framework is set to be voted by a European Parliament committee on Monday.

New Amendments on EU Crypto Legislation

A previous draft of the MiCA framework contained a provision that proposed a prohibition of cryptocurrencies that relies on environmentally unsustainable proof-of-work consensus mechanisms starting from January 2025.

The provisions were ultimately stripped, but according to statements made over the weekend, a more ‘watered-down provision’ appears to have been included once again.

A compromised version, also dubbed 'v9' states 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."
"Crypto-assets that are issued, offered or admitted to trading in the Union before [please insert the date of entry into force of this Regulation] shall set up and maintain a phased rollout plan to ensure compliance with such requirements," the text also states.
It also says that energy-intensive crypto assets that are already in use in the EU before the legislation comes into effect, will have to "set up and maintain a phased rollout plan to ensure compliance with such requirements."

However, if the proof-of-work consensus mechanism is operating on a small scale, it's exempted from having to meet sustainability standards. But, what qualifies as a small-scale operation is yet to be determined.

Industry Backlash Against Potential Proof of Work Ban

The newly released version of the Markets in Crypto Assets (MiCA) report has resulted in more pushback from the crypto industry.

On Friday, crypto hardware wallet company Ledger issued a statement, saying:

 "Individuals and organizations should be free to choose the technology most appropriate to their needs. Policymakers should neither impose nor discriminate in favor of a particular technology. This is deeply concerning and would have serious consequences for Europe."

Pierre Person, a legislator in Paris and member of the Law Commission too condemned the newly added language in a Twitter thread.

The EU parliament is set to vote on the latest MiCA draft today.

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EU’s MiCA Vote Today Could Ban Proof-of-Work Cryptocurrencies
Jafrin Ahmed
Jafrin is a cryptocurrency journalist/researcher fascinated by the world of decentralization. She is hopeful towards blockchain’s innovation and its potential to reshape the world for good. Currently, she is bringing out the best of cryptosphere via covering the latest ins and outs of the blockchain space.

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