Cryptocurrency and Capital Controls

49 Pages Posted: 3 Oct 2017

See all articles by Jill Carlson

Jill Carlson

Harvard University; University of Oxford; University of Cambridge

Date Written: June 2, 2016

Abstract

The development of cryptocurrency technology has made it possible to transfer value securely and instantaneously without a third party intermediary such as a bank or financial institution. This is an exploratory analysis of where and why this technology has gained traction. In particular, I focus on the hypothesis that the relative popularity of cryptocurrency in Argentina can be explained by the presence of long-term capital controls. To test this hypothesis, I conducted expert interviews with market players. The main conclusion is that cryptocurrency can and has been used to evade capital controls. However, it is unlikely that substantial volumes have been moved via this mechanism. Cryptocurrency’s popularity in Argentina is attributable to more than the country’s history of capital controls or high rates of inflation. Other factors, including tax rate, levels of corruption, and history of multiple exchange rates have also contributed to adoption of this technology in Argentina. I propose further case study research on cryptocurrency in additional countries in order to develop these theories.

Keywords: cryptocurrency, bitcoin, capital controls, blockchain, argentina, capital flows, ethereum, taxation

JEL Classification: F21, F30, F32, F33, F38, O17

Suggested Citation

Carlson, Jill, Cryptocurrency and Capital Controls (June 2, 2016). Available at SSRN: https://ssrn.com/abstract=3046954 or http://dx.doi.org/10.2139/ssrn.3046954

Jill Carlson (Contact Author)

Harvard University ( email )

Cambridge, MA
United States

University of Oxford ( email )

Magdalen College
Oxford, OX1 4AU
United Kingdom

University of Cambridge ( email )

Trinity Ln
Cambridge, CB2 1TN
United Kingdom

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