European Parliament Cancels Vote on Crypto Asset Framework
The vote planned on crypto regulations will no longer be held by the European Parliament after there were negative reactions to the text indicating that coins with energy-intensive mining processes would be banned. The lawmaker heading the legislative effort stated that there has to be clear about the matter before the MEPs can share their opinion. However, the head of the European Central Bank (ECB) insisted that Europe should quickly make a move in order to ensure Russia is not able to evade any sanctions. The vote on the Markets in Crypto Assets (MiCA) proposal had been scheduled to take place on February 28thin the European Parliament.
However, the head of the legislative package, Stefan Berger announced on social media that the vote was now going to be postponed as per his request. This move came after a draft of the proposal was leaked to the press, which contained provisions that prohibit offering services related to those cryptocurrencies that rely on consensus mechanisms that are ‘environmentally unsustainable’. This has given rise to concerns that cryptocurrencies that are based on the proof-of-work (PoW) algorithm, such as bitcoin, would be banned in Europe from January 1st, 2025.
Berger revealed on Friday that debate about MiCA has shown that there can be a misinterpretation of certain texts in the drafts and they can be understood as a PoW ban. He accepted that approving the existing tests would cause the European Parliament to send the wrong signal. The lawmaker said that they need to resume their negotiations and talks with parliamentary groups about this topic and they need to come up with clear facts for answering the ‘PoW’ question. He also said that they would connect with all stakeholders to reach a compromise that would give a proper legal framework to crypto assets without challenging the PoW concept.
A union-wide ban has been called on PoW mining by a number of member states, including Sweden and Germany, along with Greens and MEPs (Members of the European Parliament) from the left. They have cited its high use of renewable energy, while other sectors are transitioning towards climate neutrality. Erik Thedeen, the vice-chairman of ESMA (European Securities and Markets Authority) had also backed the idea back in January. He said that European regulators should make an effort to move the crypto industry towards mining methods that are less energy-hungry. Meanwhile, Christine Lagarde, the president of the ECB, has urged the EU to approve regulations quickly.
Lagarde said that Russia would try to evade the sanctions imposed on the country after its invasion of Ukraine by using cryptocurrencies. She said that the prohibition could be circumvented, so it is essential to have a regulatory framework in place in order to prevent it from happening. If MiCA receives approval, the European Parliament would still require the support of the European Commission and individual member states. A final decision regarding the proposal would be made later in the year. A number of EU members, including Germany, have insisted that the crypto oversight for the bloc should be given to a new anti-money laundering agency.