EU’s ESMA Wants Public Input on Proposed DLT Regulation

The European Union’s Securities and Markets Authority (ESMA) has called on concerned market stakeholders to comment on its proposed regulation bordering on the use of Distributed Ledger Technology (DLT) for use in securities trading and settlement. - 2022-01-06T153250.095.jpg

Dubbed the “call for evidence,” the ESMA said it seeks feedback from stakeholders on the need to amend the RTS on pre-and post-trade transparency and data reporting requirements in the context of the DLT Pilot.

According to the notification published by the ESMA, the DLT pilot is not completely finalized; however, there is a political agreement between the EP and the Council to establish the framework. On this ground, the regulator wants public input prior to finalizing the regulations for the European Commission to approve.

The Call for Evidence is targeted at trading venues, securities settlement systems, and entities that are considering operating under the DLT Pilot and for market participants that plan to use DLT market infrastructures. The deadline for submission of comments was slated for March 4. The ESMA hopes by its timeline. The DLT Pilot will be implemented across each EU member state by early 2023.

The European Union is very upfront about regulating the digital currency ecosystem and the unique technologies that are affiliated with the industry. While The ECB issued a report regarding stablecoins and describes these assets as “digital units of value that are not a form of any specific currency (or basket thereof) but rather, by relying on a set of stabilization tools,” which try to minimize the volatility of their prices, the EU’s apex bank is concerned with the lack of sweeping regulations governing the use of these assets.

Other countries, including the United States, share this sentiment. While many watchdogs do not dispute the innovative nature of these crypto-assets and their underlying technologies, surveillance and advocacy to regulate the space have grown in recent times.

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Swedish call to ban crypto mining ‘completely misinformed,’ says fund manager

A Swedish financial watchdog’s call for a European Union-wide ban on proof-of-work (PoW) crypto mining, mainly known as the method of minting new Bitcoin (BTC), has received backlash from crypto-related fund managers. 

Melanion Capital, a Paris-based alternative investment firm known for its Bitcoin ETF, addressed the Swedish Financial Supervisory Authority and Swedish Environmental Protection Agency’s call to ban PoW mining across Europe.

“The claim that Bitcoin miners jeopardize the electricity network is completely misinformed,” noted Melanion, reminding that Bitcoin miners’ business model is prone to collapse when the electricity demand increases as it would also increase energy prices.

The statement points to the authorities that have chosen to welcome miners instead of banning them, such as Texas, adding that Bitcoin miners are complementary for renewable energy power generation, “as they capture wasted energy and provide a baseload for a volatile resource like wind or hydropower.”

Due to its decentralized nature, the Bitcoin mining industry has no lobby to defend its interests and negotiate with governments, Melanion Capital reminded, adding:

“The absence of such a political counterbalance [for Bitcoin miners] should not be taken as an opportunity to implement measures rendering illegal an industry for its lack of defensive powers.”

The environmental footprint of Bitcoin mining was a major conversation at the United Nations Climate Change Conference. Speaking at a panel, Cointelegraph editor-in-chief Kristina Cornèr said it’s more important to have people in the blockchain space who are ready to think with a new mindset and search for solutions.

Related: Climate Chain Coalition advocates for the creation of a green economy at COP26

After surveying one-third of the global Bitcoin network, the Bitcoin Mining Council estimated that the global mining industry’s sustainable electricity mix grew to 56% in the second quarter of 2021.

Bitcoin miners are also looking for other energy resources, and nuclear is not off the table. Panelists at the Bitcoin & Beyond Virtual Summit reminded the potential of nuclear energy to introduce “enormous amounts of clean, carbon-free” power to the baseload.