POW: Europe Rejects Proposal Limiting Proof-of-Work Based Ledgers

On Monday March 14, the European Parliament Committee on Economic and Monetary Affairs voted against the controversial ban paragraph for the PoW-based consensus mechanism cryptocurrencies. The proposal was part of the EU Markets in Crypto-assets (MiCA) regulation presented by the European Commission in September 2020.

The resistance from the crypto community and businesses had its effect and the vote was first postponed and then the prohibition paragraph was removed.

The proposal aimed to restrict the use of Proof-of-Work (PoW) cryptocurrencies throughout the European Union. The authors of the bill, the Green, the Left and the Social Democrats groups, were primarily concerned about the energy-intensive computing process that exerts a negative influence on the environment.

The Committee voted 30–23 to keep the provision out of a draft. If enacted, the legislative proposal could have forced PoW cryptocurrencies to shift to more environmentally friendly mechanisms or even criminalized the cryptocurrencies across the EU.

At the moment, EU countries have to individually issue their own regulatory requirements for crypto assets in accordance with some overarching guidelines.

Also, the Commission shall present amendments to the rejected provision, with a view to including in the EU sustainable finance taxonomy any crypto asset mining activities that contribute substantially to climate change mitigation by 1 January 2025.

The rest of MiCA regulation, which addresses operations of the stablecoins, crypto exchanges and other digital asset service providers is expected to go into force in 2024.