EU’s New Rule Relieves Bitcoin Miners from Stringent Crypto Compliance

• The European Union’s Markets in Crypto-Assets Regulation has introduced a comprehensive framework to oversee the security of the cryptocurrency sector. 
• Bitcoin miners can now continue securing the network without additional reporting requirements, which could have complicated their business models.

The European Securities and Markets Authority (ESMA) has relieved Bitcoin (BTC) miners and Proof-of-Stake (PoS) validators from market abuse reporting requirements under the EU’s Markets in Crypto-Assets Regulation (MiCA). This decision marks an important distinction between crypto asset service providers (CASPs), such as exchanges, which must comply with strict regulations, and miners and validators, who primarily facilitate blockchain transactions rather than directly engaging in trading activities.

In December 2024, ESMA finalized its stance on which entities fall under Persons Professionally Arranging or Executing Transactions (PPAETs). Initially, there was uncertainty about whether miners, validators, builders, and searchers would need to monitor and report suspicious activities in crypto markets.

However, ESMA has officially excluded these groups from the PPAET classification, ensuring they will not be required to track market abuse. Instead, CASPs like cryptocurrency exchanges will be responsible for market surveillance and compliance.

Patrick Hansen, Circle’s director of EU strategy and policy, praised ESMA for taking a balanced approach to regulation. He stated: “Important decision by ESMA. And good to see they took the potential negative impact for the industry and the EU into account, highlighting how a different decision could have incentivized these miners/validators to leave or avoid establishing in the EU, pushing innovation offshore.”

The Global Shift in Bitcoin Mining

Despite positioning himself as a pro-crypto president, Donald Trump’s trade policies have created hurdles for Bitcoin miners in the United States. A significant concern for the U.S.-based Bitcoin miners is the impact of tariffs on Chinese imports. While these tariffs were intended to protect American manufacturing, they have driven up costs for mining hardware, a critical component of Bitcoin mining operations.

Bitcoin mining depends on application-specific integrated circuits (ASICs), which are designed specifically for mining digital assets like Bitcoin. However, nearly 98% of ASIC miners are produced by Chinese manufacturers such as Bitmain, MicroBT, and Canaan. Due to tariffs on Chinese technology imports, U.S. mining firms face higher costs and potential supply chain disruptions, making it more challenging to scale operations and remain competitive in the global market.

While some nations impose stricter regulations, Belarus is charting a different course. President Aleksandr Lukashenko has urged officials to enhance the country’s energy infrastructure and leverage cryptocurrency mining as a way to utilize surplus electricity while attracting foreign investment. With an excess power supply, Belarus is positioning itself as a crypto mining-friendly nation.

Government officials have been tasked with streamlining regulations and developing concrete proposals to encourage investment in the sector. This strategy could help Belarus compete with other nations in the global crypto mining industry. Additionally, the Russian State Duma passed a bill legalizing Bitcoin mining and allowing the use of cryptocurrencies for international trade.

As covered in our 2024 report, the bill passed with 404 votes in favor, representing 89.8% of the total vote count. This legislative shift signals Russia’s intent to integrate cryptocurrency into its broader economic and trade strategies.