European Commission intent on suppressing crypto

The EU is urging US lawmakers to quickly impose comprehensive crypto regulations and standards, and also aims to rein in Bitcoin’s energy usage. 

Global financial agencies look to collaborate

The European Commission is still banging the drum on what it perceives as crypto’s potential threat to the financial system. In a recent interview with the Financial Times, the European Commission’s head of financial services Mairead McGuinness said:

“We do need to see other players also legislating, perhaps differently, but with the same objective…We need to look at global regulation of crypto.”

McGuinness pushed the same line as the IMF and the European Central Bank when she expressed concern as to the continued lack of a regulatory framework for crypto, even as the very comprehensive European MiCA regulations are near to being passed into European law.

Along with the IMF, another non-elected financial body that is keen to see some harsh regulation imposed on crypto is the Financial Stability Board (FSB), an international agency that has huge influence over the global financial scene.

The FSB put its own list of nine recommendations for crypto regulations out there with the hope that all the G20 nations will implement them. Given the FSB’s influence this is quite likely.

An energy efficiency label

The European Commission has also been busy with trying to shackle Bitcoin as regards its energy consumption. According to Bloomberg, the EC is working with international partners to develop an “energy efficiency label” to persuade cryptocurrencies to adopt less intensive protocols such as proof-of-stake.

The EU’s executive stated in a draft action plan:

“In harnessing the use of cryptocurrencies and other blockchain technologies in energy markets and trading, care must be taken to use only the most energy efficient versions of the technology.”

Opinion

In spite of the current energy crisis being seen across the globe, it might be argued that Bitcoin’s energy usage is worth it, in order to ensure that it remains decentralised. 

Ethereum has recently made the switch from the proof-of-work consensus mechanism used by Bitcoin, to the far more energy efficient proof-of-stake consensus.

However, Ethereum is now very much able to be controlled by those who own the majority stake on the network. In addition, pressure can now be brought to bear on the network to freeze particular transactions that the authorities might not like.

The banking industry and the gold mining industry use a lot more energy than Bitcoin. Be that as it may, it is not an excuse for Bitcoin. In order to become more viable the number one cryptocurrency will need to use far more green forms of energy.

This is happening, and it might be imagined that at some point in the future Bitcoin can reach a very high percentage of green energy mining.

The alternatives for those wishing to take their wealth out of the collapsing fiat monetary system just do not exist as yet. It’s precious metals or Bitcoin. The advantages and disadvantages of each is an argument many have sought to resolve.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.