Bitcoin price in danger as EU considers limiting crypto

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Cryp­tocur­ren­cy could soon endure a fresh pum­melling because the Euro­pean Union is seri­ous­ly con­sid­er­ing a ban of sorts on blockchain.

Cryp­tocur­ren­cy could soon endure a fresh pum­melling because the Euro­pean Union is seri­ous­ly con­sid­er­ing a ban on dig­i­tal assets. 

Blockchain investors are wait­ing with bat­ed breath for the out­come of a vote in the EU par­lia­ment which will deter­mine the future of cryp­tocur­ren­cy on the continent. 

The par­lia­men­tary vote will occur on Mon­day local time, which will be lat­er today for those on Aus­tralian time zones. 

Mem­bers of the EU’s eco­nom­ic and mon­e­tary affairs com­mit­tee are set to vote on a draft of the pro­posed Mar­kets in Cryp­to-Assets (MiCA) framework.

Were the pro­pos­al to go ahead, it could be bad news for cryp­tocur­ren­cy investors.

An eleventh-hour addi­tion to the frame­work is call­ing for a lim­it on the use of cryp­tocur­ren­cy, includ­ing “phas­ing out” pre-exist­ing tokens like bit­coin and ethereum that are already being trad­ed in Euro­pean countries. 

And it seems the out­come is too close to call, with insid­ers pre­dict­ing the vote may be defeat­ed by a very slim major­i­ty, Coin­Desk report­ed.

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Envi­ron­men­tal con­cerns at cen­tre of proposal

There have been con­cerns in recent weeks that Rus­sia is cir­cum­vent­ing eco­nom­ic sanc­tions imposed on it because of its inva­sion into Ukraine by using cryp­tocur­ren­cy to safe­guard wealth and trade. 

Some, includ­ing Ukraine’s Vice Prime Min­is­ter Mykhai­lo Fedorov, called for cryp­tocur­ren­cy exchanges to ban all Russ­ian trans­ac­tions.

How­ev­er, the EU is cit­ing envi­ron­men­tal con­cerns as its main rea­son for crack­ing down on cryp­tocur­ren­cy in the rad­i­cal proposal. 

The draft aims to lim­it the use of cryp­tocur­ren­cies because of its high ener­gy use.

In fact, the process of cre­at­ing bit­coin to spend or trade con­sumes a whop­ping 91 ter­awatt-hours of elec­tric­i­ty annu­al­ly, which is more than a small coun­try, like Fin­land, uses in an entire year. 

The late amend­ment was added to the pro­pos­al because bitcoin’s exces­sive car­bon foot­print could break the rules sur­round­ing the EU’s envi­ron­men­tal standards. 

Cryp­tocur­ren­cies must adhere to “min­i­mum envi­ron­men­tal sus­tain­abil­i­ty stan­dards with respect to their con­sen­sus mech­a­nism used for val­i­dat­ing trans­ac­tions, before being issued, offered or admit­ted to trad­ing in the Union,” one draft pro­pos­al sight­ed by Coin­Desk read.

One cryp­to pro said the move was “extra­or­di­nar­i­ly con­cern­ing” and the vote lat­er today was incred­i­bly important.

Jere­my Allaire, founder of Cir­cle Pay, wrote online: “Extreme­ly high stakes vote in the EU. 

“That such a pro­pos­al made it this far is extra­or­di­nar­i­ly con­cern­ing and unlike­ly to stand up to prac­ti­cal reality.”

A com­plete or par­tial ban on cryp­tocur­ren­cy is not entire­ly unheard of.

In Jan­u­ary, Rus­sia indi­cat­ed it was look­ing to ban the dig­i­tal assets entire­ly over mon­ey laun­der­ing and envi­ron­men­tal concerns.

Chi­na went a step fur­ther and com­plete­ly banned all things cryp­to at the end of Sep­tem­ber last year in a major tech crackdown.

Egypt, Iraq, Qatar, Oman, Moroc­co, Alge­ria, Tunisia and Bangladesh have also banned cryptocurrency.

In Novem­ber, Indone­sia banned cryp­tocur­ren­cy for its entire Mus­lim pop­u­la­tion because it con­tained “ele­ments of wagering”.

Cryp­to enthu­si­asts have already dodged one bul­let in the past week when it came to gov­ern­ment crack­downs on dig­i­tal assets. 

Last week, US Pres­i­dent Joe Biden signed a his­toric exec­u­tive order on cryptocurrency. 

Peo­ple were con­cerned that he would be seek­ing to ban the dig­i­tal assets amid rumours that Rus­sians were evad­ing eco­nom­ic sanc­tions by trad­ing cryptocurrency.

How­ev­er, after the exec order was announced, the price of bit­coin actu­al­ly jumped by 10 per cent, buoyed by the gen­er­al con­sen­sus that the changes were positive. 

Read relat­ed top­ics:Cryp­tocur­ren­cy

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