Proposal to ban Proof-of-Work suddenly reappears in EU’s draft crypto law

Proposal to ban Proof-of-Work suddenly reappears in EU’s draft crypto law


2022-03-14 04:05:15

The Proof-of-Work ban, which had previously been repealed, suddenly reappeared in the EU’s proposed cryptocurrency law.

Proposal to ban Proof-of-Work suddenly appeared in the EU’s draft crypto law

As reported by CHK, at the beginning of March, European Union (EU) legislators agreed to remove a provision that could lead to the banning of coins using the Proof-of-consensus algorithm. of-Work (mining money like Bitcoin or Ethereum) from the draft law “Markets in the Crypto Asset Industry” (MiCA).

MiCA is the bill under review that will reshape the adoption of cryptocurrencies in Europe. Initiated in September 2020, the bill requires the European Central Bank (ECB) to establish uniform rules for crypto asset providers and issuers in the EU region. In short, MiCA acts as a crypto-specific regulatory framework across the European Union.

Initially, the MiCA included a requirement that, by 2025, the law would ban the issuance, circulation, and trading of cryptocurrencies that “have an environmentally unsustainable consensus mechanism.” Opponents of the bill have argued that the ban is tantamount to “killing” Bitcoin and Ethereum in Europe, and makes it impossible for regulators to store Proof-of-Work coins for its customers.

Later, lawmakers agreed to remove the controversial request from the MiCA draft in early March.

However, as of March 12, some crypto users on Twitter discovered that in the latest amendment to the law, it is expected to be discussed and approved in the European Parliament on 14/14. 03, the clause banning environmental cryptocurrencies has reappeared. This information has been confirmed by Patrick Hansen, a crypto legal expert in the EU region.

Although there are some changes to the wording, this clause still basically requires:

“Cryptoassets must meet appropriate environmental sustainability standards with their consensus mechanism before they can be released, promoted and traded in the European Union.

Crypto assets issued, promoted and traded in the European Union before [ngày luật đi vào hiệu lực] will have to establish and implement a phased negative impact removal plan to ensure compliance with the law.”

It can be seen that the law requires long-standing cryptocurrencies like Bitcoin or Ethereum to change the Proof-of-Work consensus algorithm, which has long been criticized for its power consumption. While Ethereum has plans to move forward with Proof-of-Stake, confirming transactions from the coins held instead of using miners to solve the algorithm, the largest and most famous cryptocurrency, Bitcoin, is not. can’t do that, because that would completely destroy the most basic tenets on which it is built.

Many fear that if the law is passed during the session of the European Parliament on March 14, it will destroy the growth potential of the cryptocurrency industry in the EU, as well as make many companies in the region lose. competition, pushing them to other countries in Asia or the Middle East, where cryptocurrency regulation is becoming easier. Europe is home to a large number of Bitcoin nodes, the transaction confirmation department for the world’s No. 1 cryptocurrency network.

Even so, hopes were not completely extinguished when Patrick Hansen said the original MiCA proposal that did not include a ban on Proof-of-Work would also be submitted to EU lawmakers. However, it remains unclear which direction the outcome of the vote in the European Parliament will go, especially as Europe has many other issues to consider such as the energy crisis stemming from the Russia conflict – Ukraine.

Synthetic CHK

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