The Icelandic Central Bank has warned against the use of cryptocurrencies, RÚV reports, due to the lack of regulatory protection.
The bank has no real oversight of the production of cryptocurrencies in the country, and very little control over how they are traded. This is despite an estimated 8% of the world’s supply of leading cryptocurrency, Bitcoin, now originating in Iceland, according to Fréttablaðið.
The bank’s Financial Supervisory Authority have issued a reminder that cryptocurrencies are not legal tender, and so are not covered by existing currency legislation. Companies operating in this area are not subject to standard financial licencing procedures, and of the estimated 60 companies mining bitcoin in Iceland only three are registered.
Authorities in the US have previously raised concerns that the anonymity of cryptocurrency trading provides cover for criminal activities, such as terrorism and child pornography. This situation is compounded by companies that deliberately “mix” electronic currency, make it harder to track transactions.
Also of concern is the environmental impact of the large installations of computing equipment used to create—or “mine”—cryptocurrencies. Icelandic data centres consume 5% of the island’s electrical power, and of that an estimated 90% is used for mining cryptocurrencies. Consequently, an estimated 4.5% of the country’s electrical power is consumed in the process.
Note: Due to the effect the Coronavirus is having on tourism in Iceland, it’s become increasingly difficult for the Grapevine to survive. If you enjoy our content and want to help the Grapevine’s journalists do things like eat and pay rent, please consider joining our High Five Club.
You can also check out our shop, loaded with books, apparel and other cool merch, that you can buy and have delivered right to your door.
Buy subscriptions, t-shirts and more from our shop right here!