The New York financial regulator, the Department of Financial Services, has issued out a letter to firms throughout the state. This letter urged for greater actions regarding financial risks that come as a direct result of climate change.
Climate Change Needs To Be In Financial Business’ Mind: DFS
The regulator stated that all companies, even those involved in Bitcoin and cryptocurrency mining, need to assess the risks that are posed by climate change. From there, they should take steps to mitigate these risks.
This letter runs in tandem with a similar document that was sent back in September by the regulator. This previous document, in particular, was sent out to insurance companies across the state.
An Array Of Potential Damage By Climate Change
The letter explicitly highlighted the risks of climate change, including reduced economic output thanks to climate shock. This, in turn, could lead to an increase in defaults, asset devaluation, as well as widespread financial losses, and tighter lending criteria.
Another reference made in the letters was to risks of flooding, as well as highlighting other events that could directly harm communities and businesses. This is in regard to events that could arise thanks to climate change throughout the years ahead.
The regulator highlighted crypto mining, in particular, stated that these miners need to be aware of the impact mining BTC has on the environment. The regulator described mining as having a “sizable” impact on the environment, when viewed in relation to the token’s value. As such, the regulator is urging that virtual currency firms need to increase the level of transparency regarding the equipment and locations of crypto mining operations.
Crypto Mining Causing Large Environmental Impact
These comments stand in tandem with similar warnings issued by the Commodity Futures Trading Commission (CFTC)’s Chairman, Heath Tarbert. Tarbert had raised awareness of crypto mining’s impact on the environment, stating that mining has a number of issues, the top one being for the environment.
The New York Department of Financial Services fully expects all firms that had received such a letter to do an assessment. This assessment must be in regard to the risks that are posed by climate change to their respective businesses. From there, these businesses must take steps in order to reduce both direct and indirect impacts that are likely to happen.
This issue will most likely start to become a more prevalent part of compliance, moving forward. The DFS is currently in the process of developing a strategy to add climate-related risks into its current supervisory mandate.