The blockchain technology that powers cryptocurrency originated in an obscure white paper, anonymously published under the name Satoshi Nakamoto in 2008. In the 13 years following its publication, the cryptocurrency industry has exploded and is now valued at over $2 trillion.1 The increasing interest from investors in Bitcoin (which accounts for over 50 percent of the cryptocurrency market capitalization),2 DogeCoin, Ethereum and other cryptocurrencies has brought significant public and regulatory interest to the space. In particular, members of the public and regulators have increasingly focused on the degree to which cryptocurrencies either positively or negatively impact the broader communities in which they operate.

Environmental, Social and Governance (ESG) criteria are standards for a company’s operations that investors have begun using to either screen out potential investments that have deleterious effects (according to the criteria), or to modify the criteria for making new investments in a manner harmonious with the ESG criteria.3 Environmental considerations include, for example, a company’s energy use and pollution. Social criteria often examine how a business carries out its relationships, including with clients and suppliers or among its employees. Governance concerns generally relate to how transparent a company is, the composition of its board and holding boards accountable for the promises that they make to their shareholders. ESG’s popularity continues to grow alongside crypto assets. Last year, the more than $50 billion invested in sustainable mutual funds and ETFs set a new record.4 This growth comes as the Biden administration recently issued an executive order seeking to revise rules that limited investments focused on ESG factors in retirement accounts.5 Wealth managers across the country have acknowledged that a focus on ESG investments can offer long-term stable returns and enhance sustainability.

While ESG and crypto assets have both been independently gaining popularity, investors have yet to draw significant links between ESG and crypto assets. This advisory discuss these links and will focus on the relationship between ESG investing considerations and the future of cryptocurrencies and crypto assets.

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