Crypto industry warns of ‘existential threat’ from draft EU regulation
A European parliamentary committee is poised to vote on new regulation for crypto which industry experts fear could effectively ban Bitcoin and Ethereum.
Draft legislation says crypto assets in the EU “shall be subject to minimum environmental sustainability standards” with all digital assets traded in the EU required to “ensure compliance,” Bloomberg first reported.
Crypto friendly politicians and industry heavyweights from across Europe have spoken out against the proposed legislation, dubbed MiCa, which could ban assets that rely on an energy intensive mining process known as proof-of-work.
“EU Commission to ban Proof-Of-Work consensus protocols. All participants in the ecosystem from block producers to traders will be impacted by this full EU wide prohibition,” wrote Ian Taylor the chief executive of industry body Crypto UK on LinkedIn.
Taylor noted that the draft legislation could have a pervasive impact on crypto with Bitcoin, Ethereum, Decentralized Finance and NFTs facing an “existential threat.”
Under the proof-of-work consensus mechanism, which is used by the world’s largest crypto currencies Ethereum and Bitcoin, miners use powerful computers to try and solve complex algorithmic puzzles in order to verify transactions and create new coins.
Bitcoin environmental footprint is a major concern for European regulators with its total energy consumption exceeding 130 TWh per year, more than entire countries including Ukraine, Norway and the United Arab Emirates.
“MiCa regulation will be voted on next Monday. As it stands, it definitively condemns the future of crypto-assets in Europe,” wrote French politician and crypto champion Pierre Person on Twitter.
“We at Ledger will always defend freedom and self-custody, particularly in our backyard,” wrote Pascal Gauthier the chief executive officer for crypto wallet provider Ledger.
“We are calling on you all to contact your Member of European Parliament and let them know that you oppose a Bitcoin ban in Europe,” Gauthier added.
The Economic and Monetary Affairs Committee will vote on the bill on Monday. The focus on energy intensive mining practices follows pressure from EU financial regulators who have raised concerns that crypto mining is incompatible with Paris Climate commitments.
Earlier this year Erik Thedéen, the vice-chair of Europe’s securities and markets authority, called for Proof of Work mining to be outlawed.
“The solution is to ban proof-of-work,” Thedéen told the FT. “Proof-of-stake has a significantly lower energy profile,” he added, calling for the crypto industry to shift towards more “efficient technology.”
Ethereum already has plans to move to a proof-of-stake consensus mechanism, a change which will reportedly cut energy usage by an estimated 99.95 per cent according to project developers.
Read more: Crypto mining under fire as EU regulator sounds alarm