At the end of February, there was a ban on “energy-intensive cryptocurrencies” in the EU. At the time, quite a few feared a ban on Proof-of-Work-based (PoW) assets. The move was averted at the last second in Parliament.
Now representatives of the EU Parliament from the Greens, Left and Social Democrats are bringing a PoW ban back on the agenda in a trialogue with the Commission and the Council. At worst, the demands could prompt crypto providers to stop supporting PoW-based cryptocurrencies like Bitcoin. BTC-ECHO has the draft in front of it – and it’s quite a challenge. But one after anonther.
The first requirement concerns the amount of information that crypto projects should provide in their white paper. In it, according to the will of the EU Parliament, “general information on the environmental and climate impacts of a [jeden] consensus mechanism”.
For Bitcoin, the most well-known PoW-based cryptocurrency, this is problematic in that it is not possible to change the white paper at a later date. Experts are alarmed. Robert Kopitsch from the association Blockchain for Europe warns BTC-ECHO:
The new demands of the S&D and Greens are not only an immense effort for everyone involved, but also create new regulatory uncertainties, which in extreme cases could lead to the ban of some crypto assets such as Bitcoin. The initiative also goes far beyond the agreement already reached in the EU Parliament.
Bitcoin providers should check compliance with sustainability standards
Furthermore, the negotiators in the EU Parliament want to oblige crypto providers to present information about the most important negative environmental and climate impacts for each crypto asset offered “prominently” on their own platform.
In addition, the European securities regulator is to define sustainability standards and thresholds. Originally, the parliamentary draft referred to “guidelines”. With the new wording, the negotiators from the Green, Left and Social Democrat camps are raising the measures to a mandatory level.
The standards that have yet to be defined must therefore be complied with by crypto providers if they want to operate in the EU. The platforms should also take “effective measures” to “appropriately address negative environmental and climate impacts”. Consequently, non-compliance could result in the respective cryptocurrency being excluded from trading venues.
In the April issue of BTC-ECHO Magazine, we summarized the Bitcoin ban drama. At that time it was clear that the negotiations were less constructive and much more ideological in nature. It seems so this time too. The extent to which the new demands have been agreed with the rest of Parliament remains to be seen. However, it seems as if the ban faction around the Greens, Left and Social Democrats is trying to turn the defeat in the parliamentary vote into an ideological victory in the trilogue. It remains to be seen whether this will succeed. The trilogue negotiations take place today, June 14th.
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