The European Union Votes Down Proposed Crypto Ban
Much has been made of the cryptocurrency ban in China and Russia. Though the banning of cryptocurrencies in these totalitarian nations is certainly a negative in the context of cryptocurrency investing, we would be remiss not to mention the fact that free nations are growing increasingly bullish on crypto.
The United States recently put the wheels in motion for bare bones crypto regulation that will ultimately prove to be a net positive for the industry. The European Union (EU) also made a move that is a significant boon for the crypto industry. The EU voted down a proposed ban on these alternative value stores, paving a path for crypto to soar to new heights in the near future.
The EU Might Become a Crypto Haven
The leaders of the EU voted against a potential ban on crypto after a move to regulate the industry generated insufficient votes. The EU parliamentarians voted against a provision within overarching regulatory framework that would have effectively banned Ethereum and Bitcoin in the EU. The votes were cast by politicians within the EU parliament’s economic and monetary affairs committee. To be more specific, these powerbrokers voted on a proposed amendment to the legalese contained within the Markets in Crypto Assets legislation from 2020.
The language that bans the offering of cryptocurrency services that relies on a proof-of-work mechanism for mining was added, meaning there is that much more pressure on the industry amidst the push for regulation. The provision implemented to the draft pushed for a tightening of regulation of digital assets with a license regime and the streamlining of member state rules.
In effect, the language noted above would outlaw cryptocurrencies that use an energy-sucking process to create new digital coins. The provision would have forced such crypto-makers to transition to greener forms of mining. However, the provision fell short with only 24 yay votes in comparison to 32 nay votes.
As a result, cryptocurrencies can continue using proof-of-work mechanisms for the foreseeable future. However, it is worth noting that Ethereum will eventually pivot to a proof-of-stake setup that consumes significantly less energy.
Crypto Mining Details
The mining of Bitcoin is necessary to bring additional coins into circulation. The mining has an intentionally capped maximum output in an effort to create artificial scarcity and maintain value. Bitcoin mining is also used for new transaction confirmation and maintaining the blockchain ledger’s ongoing development and maintenance. This is a decentralized network without meaningful government oversight. Though President Joe Biden recently signed an executive order to partially regulate crypto, the language of that order isn’t nearly as restrictive as many industry experts anticipated.
The new draft of the EU’s potential regulation of crypto states these assets can be subjected to specific environmental sustainability standards in regard to transaction validation and consensus mechanisms. Though there is the potential for proof-of-work to be phased out for the greater good of the environment and future generations of humanity, it will remain in place for now.
Stay tuned as there is the potential for the EU’s rules pertaining to crypto production to change as time progresses. However, for the time being, crypto is not only legal but wholeheartedly embraced by members of the EU. Even if the EU eventually moves to replace proof-of-work with a greener method of generating coins, crypto will likely remain legal throughout the continent and possibly replace the Euro at some point in the future.