EU comprehensive crypto regulation bill one step closer to final approval

The proposed MiCA framework was voted on, but did not include previously controversial provisions restricting the use of PoW cryptocurrencies.

The EU’s landmark regulatory framework governing crypto assets is one step closer to approval.

On Monday, the European Parliament’s Economic and Monetary Affairs Committee voted 31-4 in favor of a new draft of a framework for markets in crypto assets (MiCA), with 23 abstentions. The framework broadly covers the issuance and trading of cryptocurrencies and promises to make it easier for cryptocurrency companies to expand across the EU’s 27 member states by facilitating interoperability licenses that are valid between countries.

"Finally, the agreed text includes measures to combat market manipulation and prevent money laundering, terrorist financing and other criminal activities," said an official statement on Monday's vote.

The committee had earlier voted to remove a provision aimed at restricting the use of cryptocurrencies that rely on the energy-intensive PoW consensus mechanism. The regulation could effectively ban the popular cryptocurrency Bitcoin (BTC) across the EU.

Instead, the committee voted in favour of an alternative clause requiring the European Commission, which is tasked with proposing new legislation, to present “legislative proposals to include any crypto-asset mining activities that have a significant impact on climate change in the EU taxonomy of sustainable activities by January 1, 2025. (Classification System)”.

The purpose of this regulation is to reduce the “high carbon footprint” of cryptocurrencies. The PoW consensus mechanism has been heavily criticized by regulators and politicians around the world due to energy issues. Some EU leaders worry that renewable energy could be directed towards sustaining cryptocurrencies such as bitcoin rather than national use.

Members of the European Parliament "emphasized that other industries, such as gaming and entertainment, and data centres, also consume climate-unfriendly energy resources. They called on the Commission to work on legislation to address these issues in different industries".

The draft MiCA will now be transferred to further negotiations with EU governing bodies. (CoinDesk)