- Bitcoin dropped in price as the European Parliament debates a potential ban on the cryptocurrency.
- If Bitcoin is banned, it could have a significant negative impact on the market
Bitcoin and other cryptocurrencies moved into a corrective position throughout the weekend as the European Parliament committee prepares to vote on a new regulatory framework later today. The framework, which is known as Markets in Crypto Assets (MiCA), could put the Proof of Work (PoW) coins under scrutiny.
Members of the European Parliament’s economic and monetary affairs committee are set to vote on whether to bring cryptocurrencies under the scope of existing financial regulation. The vote is part of a wider effort to crack down on money laundering.
Industry executives are expecting the EU’s parliament to approve a bill that would effectively ban major digital currencies like Bitcoin and Ethereum for environmental sustainability purposes.
Bitcoin and other crypto price
The world’s most valuable digital currency stayed in a tight trading range over the weekend, with highs around $40,000 and lows just above $37,000 pressured by risk aversion in global markets owing to the conflict in Ukraine.
Meanwhile, the value of ‘altcoin‘ Ethereum stays steady at $2500, with alternative cryptocurrencies taking a minor hit. According to CoinMarketCap figures, the total market valuation has dropped by 1.3 percent to $1.72 trillion.
If approved, the measure would give European Union countries the power to ban bitcoin and other digital currencies running on the proof-of-work consensus mechanism. It would also require companies that deal in cryptocurrencies to carry out Know Your Customer (KYC) checks on their customers.
EU concerns on PoW
The European Parliament vote is not expected to result in an immediate ban on bitcoin, but it could add to the pressure on authorities to take action against the cryptocurrency.
Bloomberg released a sneak peek of the final version of this bill that will be voted on Monday in a parliamentary panel, and as expected, cryptoassets or traded in the EU “shall be subject to achieve compliance with these minimal environmental sustainability requirements, the company shall develop and implement a staged implementation strategy.”
Whatever the case, concerns about stringent regulation in Europe are deterring investors from investing in the market. The MiCA regulatory framework, which will go through several phases before 2024, when it is anticipated to be ready for approval, and the fact that it appears to be more restrictive, are causing a negative impact on digital assets in Europe.
In the United States, the Securities and Exchange Commission has begun cracking down on initial coin offerings (ICOs), while China has taken a more heavy-handed approach, banning crypto and shutting down exchanges.
The European Parliament vote comes as policymakers around the world are grappling with how to deal with cryptocurrencies. While some see them as a threat to financial stability, others see their potential for innovation.