Download This PaperInvestor Reactions to Crypto Token Regulation
European Accounting Review, Vol. 33(2): pp. 367-397
45 Pages Posted: 21 Mar 2019 Last revised: 3 Apr 2024
Date Written: May 14, 2021
Abstract
Despite calls for regulation in the crypto utility token market, it is unclear how crypto token investors value current regulatory proposals. We find that on average, investors react negatively to news that increases the likelihood of securities and transparency-related regulation. We also find that this negative reaction is attenuated for tokens rated higher on quality and transparency by intermediaries, those that have higher levels of disclosure, and listed on more liquid exchanges. The observed variation in token transparency and this muted reaction suggest investors perceive disclosure costs to be lower for tokens in more transparent environments, suggesting that transparency matters to investors.
Keywords: Regulation, Transparency, Cryptocurrencies, Crypto Tokens, ICOs, Financial Markets
JEL Classification: G10, G18, M41
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