on the crypto
After a two-week postponement, the vote on the regulation on cryptocurrency markets, better known as MiCA, is set for next Monday, March 14 in the European Parliament. The law, which was initially due to be discussed on Monday, February 28, had met with strong opposition from the bitcoin community, which it believed implied a "de facto" ban on Bitcoin.
Proof-of-work mining crypto outlawed?
According to Stefan Berger MEP, project speaker, the controversial environmental clause to outlaw cryptocurrencies that, like Bitcoin, are based on mining proof-of-work (PoW), was ultimately not included in the project to be discussed on Monday. “A separate discussion of Proof of Work is no longer foreseen in the MiCA [rulebook],” Berger announced on his Twitter account on Monday.
Instead, the MP suggested including cryptocurrencies within the scope of another EU environmental regulation, known as a sustainable financial taxonomy. “In view of the important sustainability debate, my suggestion is to include cryptocurrencies, like all other financial products, in the area of taxonomy,” Berger explained. In his opinion, the taxonomy “could provide clarity and ensure a better information base for consumers”.
What does the regulation of sustainable financial taxonomy entail?
The taxonomy regulation, in force since mid-2021, establishes the criteria that qualify an economic activity or a investment as "environmentally sustainable". This qualification depends on how these activities contribute to the EU's environmental objectives.
The application of this rule would mean that activities such as trading or mining Bitcoin must demonstrate that they contribute substantially to at least one of the six environmental objectives, cause no significant harm to the other five, and comply with the minimum social guarantees, to be included in the taxonomy.
The environmental objectives established in the regulation are the mitigation of climate change; adaptation to climate change; 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.
What is Sustainable Financial Taxonomy?
Earlier this year, the European Commission used the criteria of the Sustainable Financial Taxonomy Regulation to qualify nuclear energy and natural gas as environmentally sustainable economic activities. In particular, a growing number of Bitcoin mining farms are using "green" energy, such as gas, in their operations.
Stefan Berger reported, the MiCA project has already been available to MEPs since last Monday 7. Berger believes that the MiCA has the potential to become a global standard, which is why he called on his colleagues in the European Parliament to support the legal text in the vote.
“The strong support for the MiCA is a strong signal from the European Parliament for a technology-neutral and innovation-friendly financial sector,” he said.
The European Parliament has been working on the MiCA law since 2020 and, according to European media reports, its goals include the creation of a committee to act as a supervisor of the cryptocurrency market in the 27 countries of the European Union. The project would also seek a framework to supervise and sanction activities with "risky cryptocurrencies", including stablecoins.
