The European Union (E.U.) is currently grappling with the best way to shape regulation around Bitcoin and cryptocurrencies as they continue to gain adoption. Most notably are the E.U.’s attempts to pass legislation that aimed to ban Proof-of-Work mining due to environmental concerns. Last month, all mentions of a Proof-of-Work ban within the Markets in Crypto Assets (MiCA) bill were removed.
However, the Swedish financial regulators and the European Commission have continued discussions on a ban for Bitcoin and other cryptocurrencies. It was reported on April 21st, 2022 that a German website released documents of a meeting between lawmakers in November of 2021 where it states the possibility of banning the Proof-of-Work consensus algorithm from European countries.
Names are redacted from the document but one of the speakers compared Bitcoin to Ethereum and how Bitcoin could eventually migrate to a Proof-of-Stake consensus mechanism. “Ethereum started moving PoW to PoS because of its community,” said the speaker.
While Proof-of-Work requires energy in order to verify transactions on Bitcoin’s blockchain, Proof-of-Stake allows for consensus to occur based on the amount of coins an individual has. The more coins one owns, the more influence they have over the network.
The speaker states that moving Bitcoin to Proof-of-Stake would be determined by the success of Ethereum’s own update. “If Ethereum is able to shift, we could legitimately request the same from BTC,” added the speaker.
The speaker also did not see the need to address the Bitcoin community’s concerns for a migration to Proof-of-Stake. The speaker explains, “We need to ‘protect’ other crypto coins that are sustainable. Don’t see need to ‘protect’ the bitcoin community.”
In addition to environmental concerns that lawmakers have with Bitcoin and other Proof-of-Work cryptocurrencies, Ireland is currently preparing to ban Bitcoin donations for party members. Due to worries of Russian interference in previous elections, Ireland's Ministry for Housing is drafting legislation that would mitigate this possibility for future elections.
A task force to recommend laws was put together by Local Government Minister Darragh O'Brien in January. Cyber attacks and disinformation are also being taken into account by the team. Officials have stated that Russia’s recent invasion of Ukraine has ramped up the need for guidance as elections approach.
O'Brien states that the task force provided a “comprehensive set of recommendations to build a legal and digital bulwark against malign interference in our elections.”
A newly created Electoral Commission will also tighten the requirements for foreign donations along with giving the government the power to curate social media content. If there is anything on social media that is deemed “disinformation”, they will have the authority to have it removed from all platforms.
As Bitcoin and cryptocurrencies become more widely available, the E.U. and other governments will continue to assess the political and economic landscape that is quickly changing around the world.