The market capitalization of digital assets—for example, cryptocurrencies and non-fungible tokens—was valued at $1.95 trillion in mid-August 2021; just a month later, it was valued at $2.14 trillion, and it is still growing. Users, creators, and supporters of these assets have advanced various uses of and rationales for them, including that they will serve as a hedge against inflationary risks, that many are the modern version of art or baseball card collecting, that they will help solve racial wealth and income inequality, or that they will even a playing field that is too tilted in favor of financial institutions such as banks. Yet there is great reason to be concerned about digital assets. Theft is common, with hackers or even trustees absconding with investors’ assets; tax compliance is limited and difficult to enforce; digital assets are used to facilitate money laundering and other illicit activities; and assets may be used to evade governmental sanctions. Furthermore, the energy used to create, buy, and sell digital assets is a significant contributor to climate change, with the bitcoin network alone using more electricity per year than many countries.
The SEC’s Regulatory Role in the Digital Asset Markets – Center for American Progress
