The reference to minimum sustainability as well as implementation requirements appear to be last-minute changes introduced to curb or ban the use of digital currencies that work on a so-called “proof-of-work” consensus mechanism e.g. Bitcoin and Etherum. Proof-of-work is one of the main consensus mechanisms that govern the Bitcoin blockchain. Bitcoin miners contribute computing power to the network, which secures and processes the blockchain, and are rewarded in Bitcoin for their contribution.
Faced with criticism from the sector for a possible “de facto ban”, Stefan Berger, one of the deputies who will be present at the vote, tried to calm down and stated that the controversial environmental clause was not included in the discussion. Instead, the parliamentarian suggested including cryptocurrencies in the scope of another environmental regulation known as Sustainable Financial Taxonomy. The application of this standard would imply that activities such as Bitcoin trading or mining must demonstrate that they contribute to at least one of the six environmental objectives: climate change mitigation, adaptation to climate change; pollution prevention and control, among others.
The European Parliament has been working on the MiCA law since 2020 and its goals include the creation of a committee to act as a supervisor of the cryptocurrency market in the 27 countries of the European Union. Likewise, the project would seek a framework to supervise and sanction activities with “risky cryptocurrencies” including stablecoins.
What are the market reviews?
- The legal framework treats cryptocurrencies in a similar way to stock market products
- It implies a rapid adaptation of exchanges.
- The greatest demands are made on anchored cryptocurrencies or stablecoins, assets subject to the price of other assets such as a fiat currency, such as the dollar or the euro.
Among the requirements, it is established that the stablecoins must have all their funds backed in a 1:1 ratio by their fiat currency, they must be stored in depository accounts of entities accepted by the EU. In the event that they are used for buying and selling, both the buyer and the seller must be able to redeem directly into euros in order to be able to use those assets at any time and place as euros. Finally, any entity related to this type of asset must be registered in the EU before starting to operate within it.
Source: Ambito
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