Regulators are neglecting the environmental impact of mining cryptocurrencies, according to a new report that states less than 0.1% of proposed guidelines address the carbon footprint of issuing new tokens.
A study by reg tech firm CUBE said that regulators are overlooking the negative environmental effects of mining crypto such as Bitcoin and Ethereum.
The report, entitled Cryptopia: Regulation & Crypto on a Cliff Edge, suggests there is a potential conflict of interests for banks that are committing themselves to green projects while separately investing in cryptocurrencies.
The study, published on Wednesday, finds a paucity of regulation means that cryptocurrency firms are unclear how to act in line with ESG standards.
However, crypto may not be entirely against all the ideals of ESG investing as Ben Richmond, CEO of CUBE, said: “Already there are aspects of ESG and crypto that do work in tandem, socially, it supports the unbanked, giving people without accounts access to digital wallets that can break the cycle of financial exclusion.”
A research paper published in February this year suggested that the mining of bitcoin uses each year as much electrical energy (130TWh) as Norway.
The general manager of the Bank for International Settlements renewed last month the institution’s criticism of crypto markets saying the “vigorous but chaotic” growth in the market represented a challenge for central banks.
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