As part of Penn’s Energy Week , the University of Pennsylvania Carey Law School’s Penn Program on Regulation (PPR) co-hosted a discussion on cryptocurrencies and their far-reaching environmental impacts with Duke Law’s Lawrence Baxter. Cary Coglianese, Edward B. Shils Professor of Law and Professor of Political Science, moderated the event, which was organized and co-sponsored by the Wharton Risk Center.
The Hill, Baxter emphasized that cryptocurrencies, particularly extremely energy-intensive ones like Bitcoin, and their rising use are creating pressing new challenges for staving off the worst impacts of climate change.Baxter, the David T. Zhang Professor of the Practice of Law at Duke Law as well as the Faculty Director of the school’s Global Financial Markets Center, began with a crypto primer. With reference to an op-ed he published last summer in
“Cryptocurrency’s impact on the environment is indeed very serious — possibly the single most important policy factor against its growth,” he wrote.
Through a series of slides, Baxter showed cryptocurrency’s deleterious effects on health (particularly through air pollution) as well as its increased waste production and high opportunity costs. Baxter acknowledged short-term potential benefits of using cryptocurrency, such as the “revival of old energy-generating plants” and the possibility of tracing sanctions-evading transactions – something Coinbase has said it can do. That said, he questioned whether there would be any substantial long-term benefits, “unless cryptocurrency achieves sufficient scale and efficiency to displace the sovereign money system – and then we’re talking about other problems.”
The discussion turned to the regulatory response to cryptocurrency, and Baxter noted that Congress “has been split on this on a bipartisan basis” with strong environmental concerns expressed by Sen. Elizabeth Warren (D-Mass.). Although there has not yet been any congressional action, Baxter called attention to President Joe Biden’s recent executive order “requiring a multi-agency and multi-department exploration of cryptocurrency.” This order, which marked “the first official recognition of the importance of cryptocurrency in the economy,” was welcomed by the crypto industry, said Baxter, because if offered hope that “some kind of workable regulatory structure will emerge from it.”
Baxter also addressed whether “Green Crypto” – if achievable – might be the ultimate answer.
“I don’t think the debate is over by just saying it’s more efficient; you have to show why we should have it all. How does it benefit society?” said Baxter. “There has to be something better about crypto than the existing system, and that I think the jury is still out on.”
Baxter is the Governor’s appointee and elected Vice Chair of the North Carolina Innovation Council, and he was a member of the Regenerative Crisis Response Committee. Baxter focuses his teaching and scholarly research on the evolving regulatory environment for financial services and beyond. He also has published extensively in the areas of U.S. federal and state administrative law; domestic and global banking and regulation; comparative law; jurisprudence; criminal law (U.S. and Australia); legal writing; constitutional law (non-U.S.) and professional training and responsibility. He blogs about regulation, law, and public policy.
Coglianese specializes in the study of administrative law and regulatory processes, with an emphasis on the empirical evaluation of alternative processes and strategies and the role of public participation, technology, and business-government relations in policymaking. He has also recently written on climate change policy, public participation and transparency in federal rulemaking, the use of artificial intelligence by government agencies, and voluntary environmental programs. Coglianese, the Director of the Penn Program on Regulation, was a founding editor of the peer-reviewed journal Regulation & Governance, and he founded and continues to serve as advisor to The Regulatory Review.