French manufacturer of hardware wallets register raised the alarm about a possible EU-wide ban on crypto-assets that use the proof-of-work (PoW) consensus mechanism, calling on people to reach out to members of the European Parliament (deputies) and oppose it.
“At the last possible moment, some parties have proposed changes to the MiCA [regulation on Markets in Cryptoassets] which would ban proof-of-work consensus protocols, such as Bitcoin, Ethereum and other popular blockchains and crypto-assets in Europe, issuing an ultimatum to the rest of Parliament: “accept our Bitcoin ban or we will oppose to the entire MiCA package,” said one of the crypto industry’s top players.
(Ethereum, the second-largest crypto-asset by market capitalization, is aiming to move to the proof-of-stake consensus mechanism, which doesn’t require energy-intensive mining, but critics say it’s more centralized and less secured.)
The Economic and Monetary Affairs Committee (ECON) of the European Parliament will vote on MiCA Monday, March 14.
However, according to Patrick Hansen, head of strategy and growth at Unstoppable financedeveloper of a DeFi wallet, MPs will vote on two suggestions and one of them “does not provide for a ban”.
“There seems to be a very small majority against the ban at the moment, but [to be determined]”Hansen said.
As reported earlier this month, a MiCA project that was first proposed by the European Commission in September 2020, was revised to remove language that proposed a ban on PoW-based crypto-assets.
However, even during the ECON votes to ban these crypto-assets and the European Parliament (EP) confirms it later, long and complicated negotiations are expected between the EP, the European Commission and the EU Member States. . The entry into force of the MiCA could take years.
Furthermore, Lorenzo Vallecchi, a journalist specializing in the energy sector, opined that, if the “ban” is approved, “it basically means that PoW miners must meet specific emission standards, such as for the automotive industry, for example”.
While the shared draft also apparently indicates that “small-scale” mining operations will be exempted from these standards, “the Commission will decide what ‘small-scale’ means within six months of the approval of the directive”, according to Vallecchi.
“I just hope that the EU does not shoot itself in the foot by creating a hostile environment for prisoners of war”, concluded the specialist.
In either case, Ledger warns that if this ban is upheld, then:
- “The innovative and growing digital asset economy in Europe will disappear. Without Bitcoin and Ethereum, crypto exchanges and other crypto service providers cannot operate profitably. They will be forced to close, move or block access to Europeans. DeFi protocols dependent on ETH will not be able to serve Europeans legally. Let’s be clear, this activity will not stop, it will simply shift to the United States or Asia, where it is currently welcome.”
- “Consumer protection will be harmed by a Bitcoin ban in Europe. Due to the nature of digital assets, although “banned” digital assets will remain available in Europe, but not on safe and regulated European platforms. This would present serious consumer protection concerns, as consumers will be forced to access foreign platforms that can be difficult to understand and have less (or no) regulatory oversight.”
The company urged the European crypto community to contact their MEP and say:
“An outright ban on proof-of-work assets will cripple the EU market, encourage circumvention of the law, worsen consumer protection and push the industry out of the EU – all without any benefit to the environment! Please ask the ECON committee to oppose the amendments. ALT A and ALT G.”
MEPs proposing the ban say the PoW mechanism is not environmentally sustainable.
“If each of us must defend a more ecological and virtuous society, banning PoW is a simplistic and caricatural vision,” said Pierre Person, deputy to the National Assembly for the 6th district of Paris, reacted. “The issue is not the energy consumption of Bitcoin, but the origin of this energy. It would be more relevant to ban the mining of fossil fuels and to favor players who turn to surplus renewable energies to improve the profitability of these means of production.”
According to Person, instead of protecting European citizens, MEPs are pushing for the ban which “is mortifying to our competitiveness while, at the same time, President Biden signed legislation calling on the United States to fully embrace this new ecosystem”.
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(Updated 19:46 UTC with comments from Lorenzo Vallecchi.)