A last-minute attempt by European lawmakers to potentially enact a backdoor soft ban of Bitcoin failed on Monday in a closely watched vote followed by crypto enthusiasts.
A legislative proposal that would crack down on crypto assets using proof-of-work distributed ledger technology, which is responsible for the considerable carbon emissions of Bitcoin and Ethereum, failed to muster the necessary votes in a crucial EU Parliament committee vote.
Conservatives and free market liberals united to vote down the amendment, 30 to 23 in favor, with six abstentions, stymieing efforts by the Social Democrats and Greens. In the process, they also passed a broader package of legislation regulating digital assets for the first time in Europe, which will now proceed to a negotiation stage with more Bitcoin-friendly EU executives as well as the 27 member states in so-called trilogue talks.
Finnish parliamentarian Eero Heinäluoma, representing the main opposition Socialists and Democrats group, blasted his colleagues on the center-right for endangering efforts to boost energy independence while failing to address the catastrophic consequences of the industry’s growing energy appetite.
“The carbon footprint of a single Bitcoin transaction equals a transatlantic return flight [from] London to New York. This is 1.5 million times the energy used up by a Visa transaction,” he said in a statement on Monday.
“Supporting this completely unsustainable model is really a bad political message from the conservatives in times when energy prices for ordinary citizens and businesses are going through the roof, and when the EU is trying at the highest level to reduce our dependency on Russian gas in the coming months,” he added, suggesting center-right parliamentarians caved to pressure from industry lobbyists.
Proof of work requires blockchain network providers to compete in complicated cryptographic computations to validate the next block of transactions in the distributed ledger.
In the process they earn Bitcoin as a reward, but the electricity consumed by such “miners” to solve these puzzles equates to the energy needs of entire countries like Austria and Portugal. Rival cryptocurrencies like Tezos use the more energy-efficient proof-of-stake method, prompting other cryptocurrencies like Ethereum to plan a switch.
Fill the vacuum
The amendment to effectively ban Bitcoin by targeting its PoW consensus mechanism was introduced late last week. Progressives were hoping to sneak the proposal in the final moments ahead of Monday’s planned vote on the EU’s Markets in Crypto-Assets (MiCA) legislation.
Instead, the parliamentary committee sought a compromise solution that would address the sustainability of crypto asset mining without discriminating against specific technologies by proposing to include them in the EU Taxonomy for Sustainable Finance.
This rule book seeks to classify what kinds of investments can be deemed to match environmental, social, and governance (ESG) criteria, most recently earning controversy after nuclear and natural gas were considered sustainable despite their drawbacks.
The main center-right European People’s Party celebrated the outcome of Monday’s vote on MiCA. It argued the legislative package would bring crypto assets out of the “dodgy backwaters of the internet,” trumpeting the arrival of a new sheriff in the form of the EU that would bring order to crypto’s Wild West.
“We cannot leave crypto assets to scammers and fraudsters,“ said Markus Ferber, spokesman for the EPP on the Economic and Monetary Affairs Committee, where the vote was held. “The new rules for cryptocurrencies will fill the existing regulatory vacuum by putting in place a clear framework to protect investors and ensure market integrity.”
The legislation now will move on to the stage of three-party negotiations conducted among the European Parliament, the EU Commission, and the EU Council comprising government ministers from the member states. A senior EU official told Fortune the goal is to pass the final text of the legislation by the end of June, when France’s rotating six-month presidency of the Council comes to an end.
This MiCA package was proposed in 2020 by the Commission to introduce minimum standards governing digital tokens and offer better consumer protection after Facebook announced plans to introduce its own virtual currency, later called Diem.
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