ESG crypto coins : speculative assets, or, the future of green money?

Abstract

There is growing interest in blockchain technologies and the prospects of adopting some form of digital money in the future. Governments and regulators around the world, as well as market participants, are exploring what implications these can have on our financial system. Additionally, there is an ever-increasing pressure by regulators on firms and investors to mitigate any environmental and social externalities which their activities may cause. These two fundamental trends have given rise to, among other assets, so-called “ESG cryptocurrency.” These “ESG coins” aim to be more ESG conscious in terms of their overall environmental and societal impact compared to mainstream crypto coins such as bitcoin. In light of these trends, the objectives of this study are threefold. First, to discuss these trends and the motivations for ESG crypto coins. Second, to explore the price behaviors of these coins and, specifically, to examine whether there is herding and feedback trading behaviors which drive their price dynamics. Finally, and given the two aforementioned objectives, to discuss whether these coins are speculative in nature, or, whether there is some merit to these being the future of “green money” in our financial system.