An overview of fintech and cryptoassets

Why is fintech of interest to authorities?

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Why is fintech of interest to authorities?

Challenges presented by a lack of data, low consumer protection and high energy consumption

Published: 19 May 2022

A lack of data makes it difficult to monitor the progression of risks linked to cryptoassets

Data on cryptoassets is barely available. This is largely because cryptoassets are relatively anonymous, which makes it difficult to determine who owns them. Because cryptoassets and related services are largely unregulated and not supervised or monitored, authorities have limited possibilities of requesting information from various entities. It is particularly difficult to determine the degree of cryptoasset exposure in a certain country, because operations linked to cryptoassets are often cross-border. Altogether, the lack of data makes it difficult to determine the breadth of the risks associated with cryptoassets, and the measures that would be required to reduce them.

Cryptoassets have low consumer and investor protection

Most cryptoassets have very low or non-existent consumer and investor protection. The Riksbank, Finansinspektionen and European supervisors alike have therefore expressed that cryptoassets are not an appropriate investment, especially not for private individuals.[77] P. Jansson (2021), “Bitcoin är ingen bra investering” [Bitcoin is not a good investment], published 12 March 2021, updated 15 March 2021, DI Debatt and FI (2022), “Europeiska tillsynsmyndigheter varnar för kryptotillgångar” [European supervisors issue warning about cryptoassets]. Published 17 March 2022. Accessed 13 April 2022. [online] Available at: European supervisors issue warning about cryptoassets | Finansinspektionen. For example, it is difficult for investors in cryptoassets to place demands if problems arise or if they have been deceived, because there is often nobody to hold accountable.

Fraud is not uncommon in the cryptoasset sphere. For example, the Commodities Futures Trading Commission (CFTC) in the United States prosecuted 14 firms in September 2021 because they did not have the right authorisation for their operations or had falsely claimed to have held authorisation.[78] CFTC (2021), “CFTC Charges 14 Entities for Failing to Register as FCMs or Falsely Claiming to be Registered”, Release Number 8434-21, 29 September 2021, Commodity Futures Trading Commission.

High energy consumption linked to cryptoassets

Cryptoassets like Bitcoin are associated with high energy consumption. This is because the process for confirming transactions and mining new Bitcoins, known as proof of work, requires tremendous computing power. As the prices of Bitcoin and other cryptoassets have increased, it has become increasingly attractive to try to confirm transactions and hence receive newly created cryptoassets. Because of this, confirming transactions is becoming more difficult. This in turn has led to a need for more computing power to be fastest at successfully confirming transactions. Energy consumption for cryptoassets has therefore risen. This could in turn generate substantial carbon emissions if the energy used is fossil-based. According to estimations from the University of Cambridge, the Bitcoin network uses more energy in a year than, for example, the whole of Norway.[79] See Cambridge Bitcoin Electricity Consumption Index: Cambridge Bitcoin Electricity Consumption Index (CBECI) ( A Bitcoin transaction is also estimated to consume several thousand times more energy than a Mastercard or Visa transaction.[80] M. Laboure (2021), “The Future of Payments: Part II. When digital currencies become mainstream”, February 2021, Deutsche Bank Research.

The high energy consumption of cryptoassets is widely discussed.[81] R. Singh (2021), “How to make cryptocurrency more sustainable”, 15 November 2021, World Economic Forum. In Sweden, Finansinspektionen and the Swedish Environmental Protection Agency have stated their views on this.[82] E. Thedéen and B. Risinger (2021), “Crypto-assets are a threat to the climate transition – energy-intensive mining should be banned”, 5 November 2021, Finansinspektionen and the Swedish Environmental Protection Agency. [online] Available at: Crypto-assets are a threat to the climate transition – energy-intensive mining should be banned | Finansinspektionen. To tackle the high energy consumption, they propose an inquiry into prohibiting the proof of work method in the EU to the benefit of other, less energy-intensive methods.