what does the MiCA regulation really say?

The MiCA regulation is being voted on today, and a possible Bitcoin (BTC) mining ban is a crucial point of debate. Let’s examine what the text says about proof of work and whether the ecosystem’s concerns about it are justified.


The place of mining in MiCA

While the vote on MiCA is taking place today in the European Parliament, many voices have been raised in recent days against a potential ban on mining by proof of work in member states, consensus used by King Bitcoin (BTC). In the midst of these voices, we find in particular Pierre Person, deputy for Paris who stands out in the National Assembly for his fight in favor of a healthy regulation of our ecosystem:

If MiCA were to ban proof-of-work mining in the territory of the European Union, it would certainly be a serious strategic error of our policies, and that this would be harmful in the long term for our competitiveness. Only here, if the interpretation of the policies is still to be defined, the text does not mention prohibition, even if it is true that one point is confusing. Indeed, the text calls on the committee to be more clear, it wishes:

“[…]identify consensus mechanisms that could pose a threat to the environment with respect to energy consumption, carbon emissions, real resource depletion, waste, and specific incentive structures. Unsustainable consensus mechanisms should only be applied on a small scale. »

The text actually highlights the environmental problems of this consensus. It highlights the use of fossil fuels for part of the mining and the replacement of the equipment used which leads to electronic waste, all of which can calling into question the Paris climate agreements.

It is also possible that future regulations only concern large structures without worrying individuals mining at home. These can be considered as operating ” on a small scale “but these are just guesses.

Later, however, it is mentioned that what is missing from the proof of work is a bias present in the whole industry in the broad sense of the term, and not just in the crypto-asset sector. It is therefore put forward that the problem must be dealt with globally, so as to transform our society in its energy consumption.

“However, since other industries (such as the video game and entertainment industry, data centers, other tools deployed in the financial and banking sector and beyond) also consume energy resources that are not climate-friendly, it is important that the Union takes this into account in its environmental legislation, as well as in relations and agreements with third countries at global level. »

👉 To go further – MiCA: the draft of a European regulation for crypto-assets

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What consequences can this have?

In fact, it is difficult to speculate on the expectations that will be required for the proof of work consensus. It’s still vague and we therefore understand the heated debates due to different interpretations.

If the real impact of Bitcoin on the environment must be put into perspective, that is not the question here. In this version of the text, the MiCA regulations precisely wish encourage more sustainable mining solutions on European soil, to the detriment of fossil fuels such as coal, for example.

In the translated version of the rules, “proof of work” appears 9 times, and if the ecological question is pointed out, at no time is a possible ban put forward. Even if all this still lacks concreteness, it is therefore a question of putting this point into perspective.

Despite everything, it is really the interpretation of the regulatory text to come and the case law that will result from it, which will define the framework that awaits us.

This being so, we have only dealt with the place of mining in the text, it’s not the only controversial topic. Other aspects relating in particular to decentralized finance (DeFi) and non-fungible tokens (NFT) could indeed lead to compliance questions subject to us. relay in the background in terms of competitiveness. But we shall come back to this subject.

👉 Also in the news: United States: what does Joe Biden’s new decree say about the regulation of cryptocurrencies?

published by editions Larousse

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