Lagarde Urges EU to Approve the Regulation to Prevent Russia Using Crypto to Evade Sanctions

An intended vote on crypto regulation will not happen after negative reactions to texts that could be seen as an attempt to ban coins with energy-intensive mining. Before MEPs can weigh in on the matter, the lawmaker heading the legislative effort says clarifications are necessary, but the head of the ECB insists Europe must act swiftly to prevent Russia from evading sanctions.

European Parliament Postpones Crypto Legislation to Address Concerns Over Possible Proof-of-Work Ban

The vote on Europe’s new Markets in Crypto Assets (MiCA) proposal will not take place in the European Parliament as scheduled, on Feb. 28. Stefan Berger, the rapporteur for the legislative package, took to social media to announce it will be postponed on his request.

The move comes after a draft leaked to the press was found to contain provisions prohibiting the offering of services related to cryptocurrencies relying on “environmentally unsustainable consensus mechanisms.” These raised concerns that coins based on proof-of-work (PoW) mining, like bitcoin, would be banned from Jan. 1, 2025.

On Friday, Berger revealed the debate around MiCA has indicated that certain texts in the draft can be misinterpreted and understood as a PoW ban. He acknowledged that the European Parliament could send the wrong signal if it approves them as they are.

“In this context, I see the urgent need to resume talks and negotiations with the parliamentary groups on this topic and to establish clear facts on the #PoW question,” the lawmaker tweeted in German. He promised to try to reach a compromise with all stakeholders that would provide crypto assets with a proper legal framework without challenging the proof-of-work concept.

Members of the European parliament (MEPs) from the left, Greens and officials from several member states such as Germany and Sweden, have called for imposing a union-wide ban on PoW mining, citing its increasing use of renewable energy at the expense of the transition towards climate neutrality in other sectors.

In January, the idea was backed by the vice-chair of the European Securities and Markets Authority (ESMA), Erik Thedéen, who stated that European regulators should try to steer the crypto industry towards less energy-hungry mining methods.

Meanwhile, President of the European Central Bank Christine Lagarde has urged the EU to quickly approve the regulation that would prevent Russia from using cryptocurrencies to evade sanctions imposed following its military invasion of Ukraine. Quoted by Bloomberg, Lagarde elaborated:

There are always criminal ways to try to circumvent a prohibition, which is why it’s so critically important that MiCA is pushed through as quickly as possible so we have a regulatory framework.

If MiCA is approved, the European Parliament will have to win the support of individual member states and the European Commission, which will be tasked to evaluate the proposal. A final decision on the package is expected later this year. Several EU members, led by Germany, insist that a new anti-money laundering agency should take responsibility for crypto oversight in the bloc.