UK: Cryptocurrencies, tokens and blockchain technology

The digitalisation of assets has been on the rise since the turn of the millennium, coinciding with significant advancements in software and information technology over the last three decades. This is one of the key mega-trends that has the potential to shape the global economy in the future.

ESG considerations of cryptocurrencies

Read the full One of the biggest concerns with blockchain technology and cryptocurrencies for investors are Environmental, Social and Governance (ESG) considerations. These issues have added to the volatility experienced within the cryptocurrency market and have impacted many investors.

Arguably, the most important ESG issues are:

Environmental considerations

Large amounts of computing power – The main environmental concern regarding blockchain is the amount of computer power and therefore electricity needed to run the blockchain and verify the transactions.

Social considerations

Cryptocurrencies being used for crime – As cryptocurrencies are not regulated, many investors are hesitant to invest as these assets are sometimes used for illegal activity and are an easy way to make transactions with no middle party totally anonymously.

Governance considerations

Unregulated markets – As cryptocurrencies are new and innovative assets, the regulatory environment in which they operate is changing quickly.

Digital assets are still new in financial markets and many investors are trying to assess how they work and how they can be included in their portfolios. Additionally, there is a lot of concern surrounding ESG risks, rules and regulations with digital assets. For these reasons digital assets experience very volatile and unexpected returns.

Read the full article at Barnett Waddingham: