The European Parliament voted Monday to advance a version of the Markets in Crypto Assets bill, or MiCA, that omitted language that would have effectively banned proof-of-work-based cryptocurrencies. The bill is now headed into negotiations with the European Commission, the Council of the European Union and the European Parliament.
The MiCA legislation, first introduced in 2020, aims to provide a regulatory framework for digital assets for member states in the EU by 2025. While the initial draft had included explicit language that would have banned bitcoin and other proof-of-work-based digital currencies due to energy consumption concerns, the provision was struck after an outcry from the crypto industry.
The Ethereum blockchain is moving off of proof-of-work and toward a less energy-intensive proof-of-stake system, but the shift has been repeatedly delayed and progress has been slower than expected. Some bitcoin developers have proposed ways to reduce the energy requirements of proof-of-work.
“In view of the important debate about sustainability, my suggestion is to include crypto assets, like all other financial products, in the #Taxonomie area. An independent discussion of the Proof-of-Work is no longer planned in #MiCA,” Stefan Berger, the member of the European Parliament from Germany spearheading the bill, tweeted last week.
While the anti-proof-of-work language was rejected in a 30-23 vote, a majority voted that an alternate legislative proposal “with a view to including in the EU sustainable finance taxonomy any crypto asset mining activities that contribute substantially to climate change mitigation and adaptation” should be presented by the Commission by January 2025.
Update: This story has been updated on March 14, 2022, to clarify the status of an alternative cryptocurrency regulation legislative proposal.