Proof-of-work lives to see another day
Proof-of-work cryptocurrencies were pulled back from the brink by crypto-friendly EU lawmakers, as the Union’s Committee on Economic and Monetary Affairs (ECON) voted against a limit of the use of PoW networks in its member states.
The draft of the proposed Markets in Crypto Assets (MiCA) framework would have curtailed proof-of-work coins like Bitcoin and Ethereum (for the moment) to such a degree that opponents likened the measure to a “bank on Bitcoin.” The draft itself was already subject of much discussion. Initially the EU parliament pushed for a “ban” on PoW crypto before crypto lobbyists managed to water down the provision. Eventual the “EU Bitcoin ban” was back on the table, only to get rejeced in last Monday’s vote.
If passed, all cryptocurrencies used and mined in the EU would have had to comply with the Union’s stringent “minimum environmental sustainability standards and set up and maintain a phased rollout plan to ensure compliance.” In other words, mining would have de facto become outlawed. As such, Bitcoin miners and cryptocurrency advocates can book this one as a massive win because the EU may now add crypto mining to its taxonomy for sustainable activities.
Patrick Hansen, Head of Strategy and Business Development at Unstoppable DeFi, said that considering Bitcoin an economically sustainable activity in the EU may result in a big push for mining in the Union.
EU hostility to crypto nothing new
With notable exceptions, such as the example of a Belgian MP vowing to receive his salary in Bitcoin, the European Union’s stance on cryptocurrencies has been remarkably negative.
This is insofar surprising as individual EU member countries have passed fairly crypto-friendly regulation or have at least refrained from outlawing crypto. For example, in Germany, Bitcoin and other crypto is exempt from capital gains taxes if you hold it for more than a year. Portugal is famously crypto-friendly and does not incur any capital gains taxes on crypto. Slovenia has the highest ICO rate per capita in the Union.
The EU as a whole, though, has been bearish on crypto. That reflects a rather apathetic approach by the Union towards the tech sector. Unlike the US, Europe has no tech giants to speak of. Though some crypto companies like Aave are in Europe (even though Aave is based in London, now out of the EU), most crypto innovation is taking place in the US or Asia. The lack of a regulatory framework and an overall “crypto-positive culture” surely has not helped.
However, with the “Bitcoin ban” rejected in the EU parliament, things may take a turn for the better in Europe. The region may even become a mining hotspot, with countries in the Eastern part of the EU offering sufficiently low electricity prices to be attractive to miners. It looks like the EU has boarded the crypto train late but not too late.
