Lawyer Monthly - February 2022

WWW.LAWYER-MONTHLY.COM 15 blamed large-scale crypto mining. As climate change becomes yet more prevalent on national agendas, it is reasonable to guess that cryptocurrency restrictions will continue to strengthen as nations reach for new ways of mitigating the crisis. Criminal Potential Cryptocurrency’s usefulness for money laundering and buying drugs online has been known to regulators for years, and its prevalence has never diminished to any great extent – even during crypto bear runs, the volume of ‘dark net’ transactions remains as high as ever. Indeed, illicit activity appears to be the sole area of crypto transactions that is not affected by large-scale price fluctuations. The COVID-19 pandemic has exacerbated the spread of dark net crypto transsactions, largely in the area of ransomware attacks where infiltrators encrypt a victim’s information and demand payment in their preferred form of cryptocurrency. The worry that crypto’s potential criminal usage may outweigh its benefits was referenced explicitly in the Bank of Russia’s January report calling for a nationwide crypto ban. Turkey’s 2021 crypto ban used language in a similar vein, as did China’s most recent anti-crypto crackdown. Of course, this potential for risk has not escaped the rest of the international community. The US may soon take a regulatory stance of its own to combat fraudulent crypto practices, with President Biden reportedly readying an executive order asking federal agencies to weigh the risks and opportunities posed by cryptocurrencies. TheDamage is Done Regardless of whether or not the US and western Europe take their own steps to curb blockchain trading, the damage that the wave of regulation has inflicted on investor confidence in crypto may already be irreversible. January has seen both popular and niche cryptocurrencies plummet in value, wiping out around $1.4 trillion from the combined crypto market. Bitcoin and Ethereum have both crashed more than 50% from their 2021 peaks, while other assets have fallen more than 80%. Should the US further countries implement crypto restrictions of their own, this slip may be set to grow even more steep. The staunchest crypto supporters are not dissuaded, however. Online investor communities continue to urge each other to hold their crypto portfolios. In response to the IMF’s recommendation that his government give up Bitcoin as legal tender, El Salvador’s President Nayib Bukele responded with a derisory meme. We can only wait and wonder whether their instincts are right, or if this latest trough might be the one that finally sticks – and what the global regulatory world may look like in 2023. Australia has made similar moves towards tighter government oversight of cryptocurrency, announcing its intent to create a licensing framework for crypto exchanges alongside a possible digital currency backed by its Reserve Bank. These measures will likely only become more commonplace over time as governments continue to crack down on large technology companies, particularly in the payments space. Climate Impact While predominantly identified as an issue by end users, the impact of widespread cryptocurrency usage on the climate has not escaped the notice of governments. The root of the problem lies in crypto’s use of blockchain systems and their reliance upon heavy usage of computer power; each Bitcoin transaction, for instance, requires the majority of computers on the Bitcoin blockchain network to verify the action. Bitcoin is one of the greatest energy consumers in this respect, with each individual exchange requiring 1,173 Kilowatt Hours’ worth of energy to complete – the rough equivalent to six weeks’ worth of energy consumption in an average American household. Bitcoin mining and transactions alone expend an amount of energy per year comparable to the entire country of Norway. Aside from the greater impact that this expenditure and the associated carbon emissions have on the climate, crypto’s intensive energy use has an immediate impact on power grids, particularly in developing nations. Following a recent series of power cuts, the government of Iran has claimed that illegal crypto mining has been responsible for “10% of electricity outages this winter”. Meanwhile, Kosovo’s recent decision to ban cryptocurrencies entirely came on the heels of its own string of power outages, for which the government likewise

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