The controversial provision to ban proof-of-work poW is a type of consensus algorithm that rewards validators according to the amount of computational power they have expended. (PoW) cryptocurrencies like Bitcoin was reinserted at the last minute in the MiCA draft, which is up for a vote today.
***
This Monday, the European Union parliament prepares to vote on a draft of the proposed framework. ‘ Markets in Crypto Assets ‘, better known by its acronym MiCA, the broad legislative package to regulate cryptocurrencies in the European bloc. The debate will be crucial for the future of the industry in Europe, as one of the proposed rules in the package could effectively ban Bitcoin the biggest and most popular cryptocurrency in the world. It is a decentralized digital currency that enables users to make trustless peer-to-peer transactions. .
The draft contains a provision that seeks to limit the use of cryptocurrencies based on proof-of-work (PoW) mechanisms, such as Bitcoin y Ethereum a decentralized open-source blockchain with smart contracts functionality. due to its intensive use of energy . Although, in the case of Ethereum the second-largest cryptocurrency, is going through a multi-phase upgrade process that will eventually switch it to a proof-of-stake poS is a type of consensus algorithm that rewards validators according to the amount of crypto they have staked. (PoS) mechanism, permanently abandoning mining a process where blocks are added to a blockchain, verifying transactions. It is also the process through which new bitcoin or some altcoins are created. by computing power and exempting it from the controversial provision.
PoW provision returns to draft MiCA
As reported by DiarioBitcoin a previous draft of MiCA contained a similar provision. which proposed a ban on cryptographic services that rely on environmentally unsustainable consensus mechanisms from January 2025. But this section then was eliminated due to the refusal of industry players.
The chairman of the Economics Committee and rapporteur in charge of The vote, Stefan Berger, said on 1 March that the regulation had been withdrawn from the document. “ Correct is: The paragraph is no longer in the text. The report has not yet been voted on in committee. In this vote we will see where the majorities are. The decision has not yet been taken. “reported in a tweet .
Prior to its removal, the parliamentarian had requested to postpone the vote to review the provision more carefully in the face of multiple criticisms from the crypto community. Despite the widespread rejection, the most recent draft again contains a rule to limit PoW-based digital assets.
As reported by CoinDesk who reviewed the document, the new provision, while less strict than the previous one, appears very similar. It says that cryptocurrencies “ shall be subject to minimum environmental sustainability standards with respect to their consensus consensus is achieved when all participants of the network agree on the order and content of the blocks in the blockchain. mechanism used to validate transactions, before being issued, offered or admitted to trading in the European Union. n”.
The regulationtambién indica que si un mecanismo de consenso de prueba de trabajo está operando a pequeña escala, estará exento de tener que cumplir con los estándares de sostenibilidad, según la disposición revisada por CoinDesk . What qualifies as a small-scale operation has yet to be determined.
Cryptocurrency cryptocurrencies are digital currencies that use cryptographic technologies to secure their operation. community rejects rule
Sources familiar with the matter told CoinDesk that while the vote is still close, a small majority of committee members may still vote against the measure. The results of the vote are expected to be announced later on Monday. Once the draft is voted on it will go to negotiations between the European Commission, the council and the parliament.
Meanwhile, the cryptocurrency community has taken to social media to voice their opinion on the provision. The CEO of MicroStrategy and energetic advocate of Bitcoin Michael Saylor, said in a tweet that proof of participation assets will be considered securities, so the proof of work is still very relevant and necessary.
Banning digital digital technologies are these electronic tools that have the ability to generate, store or even process data. property would be a trillion dollar mistake.
“ An extremely important vote in the EU. That such a proposal has got this far is extremely worrying and is unlikely to stand up to practical reality. “added Jeremy Allaire, the founder of Circle Pay , and Twitter.
Extremely high stakes vote in the EU. That such a proposal made it this far is extraordinarily concerning and unlikely to stand up to practical reality. https://t.co/t8xA0EnVfE
– Jeremy Allaire (@jerallaire) March 12, 2022
Cryptocurrency mining PoW has been under the radar of regulators around the world in recent months due to its negative impact on the environment; even if renewable energy is used. In Europe, politicians and regulators in Sweden, Spain, Germany, and Norway have been demanding strict measures to curb cryptocurrency mining since last year.
- New European regulatory proposal considers limiting Bitcoin mining
- European Union clarifies that Russia sanctions extend to cryptocurrencies
- Hungary’s Central Bank urges the European Union to ban Bitcoin
Article by Hannah Estefania Perez / DiarioBitcoin
Imagen de Unsplash
