The crypto news of the week
Mar 22, 2022
The past week has been another exciting week in the crypto space. Here is a brief overview:
Failed bitcoin ban
In February 2022, MiCA (Markets in Crypto Assets) regulation legislation proposed the banning of proof-of-work currencies within the European Union, which includes Bitcoin. The PoW consensus mechanism is mainly used by leading cryptos like Bitcoin, Ethereum to secure the network. The draft law was submitted to the European Parliament for a vote on February 28. Previously, it included a mandate that by 2025, no crypto assets could be traded within the EU region if they were “environmentally unsustainable.” To avoid a ban, these assets must meet “minimum environmental sustainability standards.” But on the flip side, critics of the bill argue that a ban on Bitcoin and Ethereum mining in Europe will make it unsustainable to offer services to clients.
Contrary to what was expected, the ban on services based on the proof-of-work mechanism had not disappeared from the MiCA draft. The EU Parliament votes against a "de facto ban on proof-of-work". On March 14, 2022, only a slim majority of 32 versus 24 committee members was able to avert a Europe-wide de facto ban on Bitcoin.
While initially there were many calls for a ban on cryptos, most nations are now in favor of regulation. Leading economies of the world like the US, Russia and others seem to be leaning towards the notion that while the risks remain, the benefits that cryptocurrencies bring cannot be completely ignored. Europe has emerged as a major crypto hotspot, with countries like Switzerland becoming crypto safe havens for investors. Perhaps not so surprisingly, EU regulators reconsidered their stance on banning bitcoin.
Kazakhstan’s government has cracked down on illegal crypto miners
After China's crackdown on crypto mining in May 2021, Kazakhstan opened its doors to miners and became one of the top crypto mining spots in the world. To encourage crypto mining, the government even took steps to regulate the sector. But the sudden surge in mining activity has put undue pressure on the energy sector, which is largely dependent on coal-fired power plants.
According to a released government statement, Kazakhstan's crackdown on illegal crypto mining has resulted in miners, some associated with big corporations and former officials, shutting down. The Kazakh government said an increase in consumption has put a strain on the country's power grid. Crypto mining in Kazakhstan took a hit as its electricity deficit surpassed 7% in the first three quarters after launch. Deputy Energy Minister Murat Zhurebekov said that they officially registered 50 cryptocurrency mining companies, the rest are working in the shadows: these “grey” miners provoked the deficit.
They have since seized more than $200 million worth of mining equipment. According to the national financial market authority, 55 companies have stopped their voluntary activities.
Edward Snowden’s Warning on CBDC
Commenting on the rise of central bank digital currencies (CBDCs) when speaking at Camp Ethereal 2022 last week, Edward Snowden explained why these new assets are problematic. His problem with CBDCs is that they could give governments too much control over citizens' finances. Edward Snowden sees the CBDC primarily as a threat to the financial independence of citizens.
Governments around the world are in various stages of exploring or implementing CBDCs. A CBDC is a digital version of the US dollar or euro backed by a central bank. They are inherently centralized while cryptocurrencies like Bitcoin and Ethereum are decentralized.
Snowden also discussed the Canadian government's crackdown on truckers who were protesting the country's COVID-19 rules. "The idea that Canada of all places would do this—and I think most people see Canada as a pretty enlightened government—is really an illustration of the concern," Snowden said. "Whether you're for or against this particular protest or protest movement is really secondary to the problem that, at the flip of a switch, we are vulnerable to being unable to take anything out of our wallet."