Robert Steinadler, a year ago
Markets in Crypto Assets or in short MiCA has been all over the news in the last couple of days. Everybody was afraid that one of the amendments to the MiCA report could have resulted in a de facto Bitcoin ban within the EU. The ECON committee voted on the topic just yesterday and it seems that a ban is off the table.
But what comes after the committee’s vote and why is MiCA so important? And are miners out of the woods yet?
Regulation has become increasingly complex in the last couple of years. The crypto market has grown tremendously and the whole industry moves at a very fast pace. Regulators all around the world on the other hand are moving quite slowly. It is not their job to quickly react to all changes but rather formulate and implement adjustments to the existing set of rules carefully.
MiCA is very important for the European market because it attempts to unify regulatory approaches among member states. It is not limited to a legal framework but also includes consumer protection and oversight of companies and service providers.
It is expected that cryptocurrencies will mature further with proper regulation that acknowledges the potential of related technologies and leaves enough room for innovation.
Now that the ECON committee voted on the report it can now enter the next stage the so-called trialogue. It is held between the parliament and the council while the commission acts as a facilitator between both parties.
Unlike the work of the ECON committee, the trialogue will mostly consist of talks not involving the public. The outcome of yesterday’s vote is very important because it predetermines what is to be discussed during the trialogue.
Regarding the “Bitcoin ban” it basically leaves any environmental concerns to the EU taxonomy while MiCA will focus on consumer protection, supervision, and measures against market manipulation and financial crimes.
Miners are not out of the woods yet. The latest developments are making it very clear that mining is still causing a lot of concerns regarding its carbon footprint and its impact on climate change. MiCA will not address these concerns.
Instead, members of the parliament urged that this topic is to be moved to the EU taxonomy for sustainable activities. This means that starting from January 2025 mining will be closely monitored and its impact is going to be assessed.
The taxonomy is a classification system that is establishing a list of environmentally sustainable economic activities. It remains to be seen if mining will be considered sustainable. Of course, miners can contribute by investing in renewable energy sources or by using abundant energy that would otherwise go to waste. But then again, many activities are simply driven by the cheapest price available on the market and that makes it less likely that the industry is considered to be sustainable since the cheapest energy is often associated with high emissions.
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