Growth, growth, growth is the government mantra. But what are we growing? When it comes to the already over-large and frequently environmentally disastrous UK financial sector, riven with fraud and corruption, aiming to become a cryptocurrency centre threatens to increase the damage.
Having a Green in the room meant I was able to bring those concerns to the House of Lords debate on a major change to the law of personal property in England and Wales. (And others picked up my points.)
Cryptocurrency and the law on personal property
The proposed law came from the Law Commission, with a reference from the last government acknowledging that with the development of digital technology, older legislation, covering “things in possession”, objects that you can hold, such as jewellery or furniture, and “things in action”, such as a contractual rights or debts, did not really work for non-fungible tokens, cryptocurrency or other digital assets.
What concerned me was not the direct change in the law, which appears necessary, but the enthusiasm with which the government (and opposition) are embracing it. I quoted in the debate a government press release dated 11 September, which says that Britain wants to “maintains its pole position in the emerging global crypto race” and “maintain its position as a global leader in crypto assets”. I noted: “We are already a leader in global corruption and fraud. How much do we want to magnify that leadership?”
That reflected a quote from 2022 in the same room from Lord Evans, then the chair of the committee on standards in public life, in a debate on corruption secured by my fellow Green Party peer Jenny Jones. He said, reflecting on recent decades: “we have clearly, as a matter of policy, turned a blind eye to the perpetrators of corruption overseas using London for business or leisure purposes.” More recently, a Conservative minister acknowledged that nearly 40% of the world’s “dirty money” flows through the City of London and the British crown dependencies.
Cryptocurrency: a magnet for fraud and criminals
If we look around the world at what cryptocurrency is associated with, we see that it opens up entirely new and lucrative avenues for fraudsters and scammers, terrorists and plutocrats, oligarchs and dictators. They have been using it.
There is the well-known case of Sam Bankman-Fried from the exchange FTX in the US. Indeed, the most recent figures from the FBI, from September, show that, in the US alone, consumers have lost more than $5.6bn through cryptocurrency-related fraud – a 45% jump from 2022. Here in the UK, £3bn-worth of apparently stolen bitcoin was seized in April. The Chinese apparent owners of that Bitcoin are now seeking to get it back.
The unsustainable financial sector
On the issue of the already over-large financial sector, I pointed to an article this week from Martin Wolf in the Financial Times, which suggested that a big source of economic unsustainability is “that the pre-2008 global financial bubble, from which the UK, home to a leading financial hub, benefited… It not only exaggerated the sustainable size of the financial sector, but also exaggerated the sustainable size of a whole host of ancillary activities”.
Let us think carefully about future bubbles – and the costs that they might impose on our society.
Effects on environmental and social factors
Then there are the environmental impacts. Digital assets are often thought of airily as existing “in the cloud”, but they are very much down to Earth, and destroying the Earth. Last year, United Nations scientists evaluated the environmental impacts of just one, Bitcoin. They looked at the activity of 76 Bitcoin-mining nations from 2020 to 2021; the study was published in the journal Earth’s Future. If Bitcoin were a country, its energy consumption would have ranked 27th in the world, the equivalent of Pakistan’s consumption, with its population of 230 million people.
Energy footprint is just one aspect of this. The water footprint over a similar time was enough to have filled 660,000 Olympic-sized swimming pools, which would meet the current domestic water needs of more than 300 million people in rural sub-Saharan Africa. The land-mining footprint of Bitcoin activities was 1.4 times larger than the area of Los Angeles.
The UK government is talking about growing this and seeing how far we can make it go. What can the planet bear? And given that in International Monetary Fund figures, fraud and corruption accounts for up to 5% of global GDP – much of it stolen from the Global South – which badly needs that money for human and environmental wellbeing. Our species cannot afford the social impacts.
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