The legality of Bitcoin will be decided in a European Union (EU) vote today as committee members made a last-minute adjustment to a regulatory proposal that could ban the mining or sale of cryptocurrencies across the bloc.
The European Parliamentary Committee on Markets in Crypto Assets (MiCA) will vote today on the final draft of a regulatory proposal that may require blockchain operators to submit a rollout plan that shows how it will comply with environmental sustainability regulations.
The proposal will affect blockchains that operate on proof-of-work (PoW) models, such as Bitcoin and Ethereum - the two largest cryptocurrencies trading presently.
Because Bitcoin is decentralised, no party will be able to submit a rollout plan for the blockchain itself, which may threaten its existence in the EU given that it cannot demonstrate compliance with environmental regulations.
If approved, Ethereum will be affected, but only until it switches to a proof-of-stake (PoS) model, which is expected to take place at some point later this year.
PoS is a more sustainable method of block validation compared to PoW, removing the need for compute-heavy and energy-demanding workloads to validate blocks on a blockchain.
In a PoS model, cryptocurrency miners are replaced with willing participants that stake their own money in order to be selected to validate transactions. These participants can then make their money back, and then some, for doing the work that would traditionally be done by high-performance computers.
Experts have cast doubt over the proposed regulatory measure, saying the regulation is unlikely to be enforceable, even if it is approved in today’s vote.
“Extremely high stakes vote in the EU,” said Jeremy Allaire, co-founder and CEO at Circle. “That such a proposal made it this far is extraordinarily concerning and unlikely to stand up to practical reality.”
The proposed amendment to the regulatory review of cryptocurrencies in the EU was removed at the start of the month, confirmed by Stefen Berger, member of the European Parliament (MEP) and a member of the Committee on Economic & Monetary Affairs (ECON), overseeing the MiCA.
The ban on PoW was re-added to the proposal on Friday, according to Patrick Hansen, head of strategy at UnstoppableDeFi, who said he has seen the final draft with the last-minute amendment and holds a more pessimistic view of the current draft.
“As it stands, it definitively condemns the future of crypto-assets in Europe,” said Pierre Person, member of the French National Assembly.
UK cracks down on Bitcoin availability
The UK’s Financial Conduct Authority (FCA) announced on Friday that it would be taking proactive measures to shut down the operation of Bitcoin ATMs across the country.
The new normal: The future role of finance
The changing role of the finance function during business disruption
The financial watchdog said none of the known cryptoasset companies that operate Bitcoin ATMs have registered with the FCA, meaning they have not demonstrated that they comply with the UK’s money laundering regulations, and are therefore operating said ATMs illegally.
Operators of Bitcoin ATMs will be contacted by the FCA instructing them to shut their machines down “or face further action”.
Bitcoin ATMs can be found across the UK but are predominantly found in the larger cities operating in a variety of locations, such as corner shops or clothing stores. They allow consumers to purchase Bitcoin and transfer it to their digital wallets without needing to register with a cryptocurrency exchange.
If the EU proposal to ban PoW cryptocurrencies is passed, Bitcoin will still remain tradeable inside the UK given its detachment from the EU.
