Nowadays, cryptocurrency is notorious and accepted by many people.
Even big investors and big companies incorporated cryptocurrency in their institutional usage. However, some people are pessimistic about it. Despite cryptocurrency’s long term potential, people still thinks that cryptocurrency should be banned because it consumes a lot of energy specifically when it comes to mining.
Talk about mining. Recently, the European Union had an issue regarding the banning and limiting of Proof-of-Work cryptos. They disregarded a suggested regulation that may have prohibited Bitcoin and other cryptocurrencies, with that, they proposed new regulations to safeguard consumers and improve the sustainability of mining across the EU countries.
Since crypto assets are decentralized and out of control of the European legislation, they are concerned that it might put consumers into variety of risks such as market manipulation, and financial crimes. Aside from the financial risk factors, there are also environmental risks. We all know that PoW requires a lot of power because of competition with other miners that results to million tons of CO2 (carbon dioxide) emission, and that is a huge problem. According to some studies, bitcoin mining consumes energy more than small countries in a year. For instance, Norway’s energy consumption is lesser than bitcoin mining in a year. Regardless of all these risk factors, the crypto enthusiasts has retaliated with this issue.
For a solution to this ‘carbon emitting machine’ issue, the European Parliament requested that the European Commission include mining of digital assets or cryptocurrency in the EU classification system for future sustainable activities so that they can reduce the crypto’s carbon footprint. They even include a renewable energy solution for this and suggested “staking” instead of “mining”.
Certainly, some of the European parliamentarians has a strong hold of disagreement about cryptocurrency.
However, European Union is not disappointing these big investors in cryptocurrency, which is a good news for the crypto enthusiasts. Because in September 24, 2020, The Markets in Crypto Assets (MiCA) framework was proposed by the European Commission. Eventually, in 2023, this new regulation received its final seal of approval from the European Parliament.
The MiCA regulation’s purpose is to safeguard investors and consumers while preserving financial stability and encouraging innovation. It gives transparency to the industry and establishes a regulatory framework for all 27 member states of the European Union. One of the world’s most comprehensive travel regulations for the transfer of cryptocurrency assets is introduced by this regulation.
Though cryptocurrency is banned and not accepted by many countries, the European Union paved the way by setting a regulation to protect and sustain PoW cryptos. We could say that MiCA is a piece of legislation that sets the standard about cryptocurrency, not just for the neighboring lands of EU, but also in the entire world.