Cryptocurrency: Speculative Risks

Given the economic uncertainty experienced over recent years, Bitcoin itself having been created in reaction to the 2008 financial crisis and the failure of centralized stores of wealth, investors have naturally turned their attention to alternative sources of investment; cryptocurrency and digital assets being an example of this. Accordingly, cryptocurrencies have grown in popularity since the establishment of Bitcoin in January 2009, with an initial market capitalization of zero, and a current market capitalization of almost US$800 billion. Other widely adopted cryptocurrencies, such as Ethereum, have seen similar dramatic increases in market capitalization, and the global daily trading volume of cryptocurrency generally is estimated to be more than US$275 billion, across more than 400 platforms. 1 The market’s adoption of cryptocurrencies (along with other forms of digital assets, and the supporting and associated infrastructure) has therefore been rapid. The adoption and implementation of concomitant regulation has, in various jurisdictions, historically lagged behind this rapid pace. Various jurisdictions have also taken differing approaches to the adoption and regulation of cryptocurrencies.

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