Thursday, October 5, 2023

EU Parliament Invalidates MiCA Framework


The Economic and Monetary Affairs Committee of the European Parliament voted on Monday to invalidate EU’s ban on Bitcoin.

The committee voted against prohibiting large cryptocurrencies such as Bitcoin and Ethereum from using Proof-of-Work techniques.

MiCA Framework, Ruled Out

The committee voted to keep the proposed Markets in Crypto Assets (MiCA) framework’s regulation out. MiCA is the European Union’s complete regulatory framework for digital assets.

The legislation, which was first proposed, last week, aims to prohibit the usage of cryptocurrencies backed by blockchain technology. Proof-of-work, an energy-intensive computing method used across the EU’s 27 member states, accomplished this. As a result of strong industry resistance, the initiative subsequently repealed.

Dr. Stefan Berger is a member of the European Parliament in charge of the MiCA legal framework. On the social networking platform Twitter, he discussed the announcement. In committee, he discussed his first stage victory at MiCA. Members have opened the foundation for future-oriented crypto regulation by accepting his proposal. The final vote will approve or disapprove the report as a whole and send a strong signal for innovation.

The controversial paragraph has removed, according to Dr. Berger, and a final decision has yet to reach.

Proof of Stake Switch

It was unclear whether Proof-of-Work (PoW) cryptocurrency will be used. This is in response to a draft of the European Union’s (EU) proposed regulatory framework for virtual currency management. The framework, known as the Markets in Crypto Assets, MiCA.

The clause might have compelled Proof-of-Work (PoW) cryptocurrencies to switch to more eco-friendly algorithms. However, it did not receive the necessary votes in parliament.

Major crypto assets such as Bitcoin and Ethereum uses PoW. It is a consensus process that underpins digital assets that consume a significant amount of energy to run.

Legislators have been closely scrutinizing the computing process in recent months due to concerns about energy consumption. While Bitcoin’s popularity has grown, so has the debate over its energy use and environmental implications.

As a result, some major cryptocurrencies, including as Ethereum and Dogecoin, have stated that they intend to switch from the present Proof-of-Work (PoW) crypto consensus mechanism to Proof-of-Stake (PoS). Processing transactions and creating new blocks on a blockchain in an efficient and environmentally friendly manner refers to a PoS.

However, the PoS approach is superior to the PoW one divides the crypto community. Some users and well-known individuals in the market, such as Jack Dorsey, have pointed out that the new technique does not give the same level of network security as proof of work.

In the meanwhile, there is no indication that Bitcoin, the world’s most popular cryptocurrency, will switch to the PoS mechanism.

Louis Honsa
Louis Honsa
Louis Honsa is an independent writer for Cryptoconstellation. He is a data analyst and trades NFT’s too. Louis enjoys cycling and working out in his free time.

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