EU votes against Bitcoin ban but drafts sustainability rules

The European Parliament has rejected a regulatory proposal that would have essentially banned Bitcoin. The controversial proposal was part of the Markets in Crypto Assets (MiCA) framework, which was first proposed in 2020 to provide some legislation for governing digital assets.

A last minute addition to the bill was made this weekend, which would have effectively banned proof-of-work-based cryptocurrencies like Bitcoin due to concerns about how it uses energy. Proof-of-work is an incredibly energy-intensive process that's needed to validate transactions and add new blocks to the Blockchain. Its environmental impact has come under scrutiny time and time again, and for good reason.

According to the Cambridge Centre for Alternative Finance , Bitcoin networks account for 95.45 terawatt-hours annually. In simple terms, this means Bitcoin consumes more energy than over half of the world's countries each year on an individual basis.

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This knowledge has caused the likes of Tesla to back off from Bitcoin, and is giving ammunition to countries like China who have chosen to enact a blanket ban. Ethereum is only marginally better, but developers are trying to move it to a more energy-efficient proof-of-stake (PoS) model, but progress has been slow.

Europe is so far refusing to go so far to banning crypto, but the regulation proposal is still going ahead without that added proposal. The bill, which should provide EU member states with a regulatory framework for digital assets by 2025, is currently being discussed by the European Commission, the Council of the European Union and the European Parliament.

Aside from debating how to make bitcoin more sustainable by reducing its carbon footprint, (MEPs are calling on the European Commission to classify crypto-assets mining under the EU taxonomy for sustainable activities by 2025), this bill will provide much needed legislation to a wild west industry.

Currently, cryptocurrencies aren't under the control of central banks or public authorities, which means the EU can't legislate them. This deregulation is what makes cryptocurrencies attractive to many investors, but can also cause "risks for consumer protection and financial stability," according to the European Parliament.

Cryptocurrency scams are rife. A massive $770 million of losses from social media rackets were reported to the FTC in 2021.

To try to protect consumers and safeguards against such 'market manipulation and financial crime', MEPs voted for a uniform legal framework for crypto-assets. The bill is going to a vote next week.