The European Union looks set to finally pass its regulatory framework on Bitcoin and various altcoins into law, with an expected vote on Monday. However, there are concerns that with the draft, the EU will effectively ban Bitcoin and Ethereum.
How will the EU’s decision affect Bitcoin and altcoins?
As we have previously reported as Kriptokoin.com, European Central Bank (ECB) President Christine Lagarde recently called for the region’s cryptocurrency regulation to be approved as soon as possible. However, crypto enthusiasts may not be happy with the outcome, as the EU’s Markets in Crypto Assets (MiCA) regulatory framework includes a provision that restricts the use of proof-of-work (PoW) cryptos.
The previous MiCA draft included banning PoW-powered cryptocurrencies, which are called environmentally unsustainable consensus mechanisms. The section containing this provision was later repealed following backlash. However, this new draft, which is expected to be voted on Monday, still contains a similar provision, albeit in softer language.
What’s in the draft?
says that cryptocurrencies “will be subject to minimum environmental sustainability standards according to consensus mechanisms used to validate transactions before they are produced, offered or accepted for trading.” While the draft states that an entity with small-scale operations will be exempted from energy supply, it remains unclear what the EU perceives as small-scale.
PoW is a consensus mechanism used by coins such as Bitcoin, Ethereum, Litecoin, Dogecoin, Monero, Zcash. The mechanism requires many computers to work hard to solve complex problems to verify transactions on the network, giving crypto rewards to the system that reaches the solution the fastest. However, it requires a lot of energy to power computers or mining equipment. Meanwhile, it is worth noting that ETH and DOGE will transition to proof-of-stake.
BTC price dropped
Meanwhile, the price of Bitcoin, the largest cryptocurrency powered by PoW, dropped from $39,202 to $37,709 in the past 24 hours. Some think that this important vote in the EU was behind the decline.
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