The Icelandic Central Bank has warned against the use of cryptocurrencies, RÚV reports, due to lack of regulatory protection.
The Bank has no real control over 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 cryptocurrencies. Bitcoin, which now originates in Iceland, cf. Fréttablaðið.
The Bank’s Financial Supervisory Authority has issued a reminder that cryptocurrencies are not legal tender and are therefore not subject to current currency legislation. Companies operating in this area are not subject to standard financial licensing and of the estimated 60 companies that operate bitcoin mining in Iceland, only three are registered.
The US government has previously expressed concern that the anonymity of cryptocurrencies provides shelter for criminal activities such as terrorism and child pornography. This position is added to companies that deliberately “mix” e-currencies, making it more difficult to track transactions.
Also concerned about the environmental impact of the large-scale installation of computer equipment used to create – or “mine” – cryptocurrencies. Icelandic data centers spend 5% of the island’s electricity and it is estimated that 90% is used for mining cryptocurrencies. As a result, it is estimated that 4.5% of the country’s electricity is consumed in the process.
Source: The Nordic Page