Regulating Cryptocurrencies: Assessing Market Reactions

15 Pages Posted: 30 Nov 2018

See all articles by Raphael Auer

Raphael Auer

Bank for International Settlements (BIS)

Stijn Claessens

Bank for International Settlements; University of Amsterdam - Finance Group; Centre for Economic Policy Research (CEPR); Tinbergen Institute; European Corporate Governance Institute (ECGI)

Date Written: September 1, 2018

Abstract

Cryptocurrencies are often thought to operate out of the reach of national regulation, but in fact their valuations, transaction volumes and user bases react substantially to news about regulatory actions. The impact depends on the specific regulatory category to which the news relates: events related to general bans on cryptocurrencies or to their treatment under securities law have the greatest adverse effect, followed by news on combating money laundering and the financing of terrorism, and on restricting the interoperability of cryptocurrencies with regulated markets. News pointing to the establishment of specific legal frameworks tailored to cryptocurrencies and initial coin offerings coincides with strong market gains. These results suggest that cryptocurrency markets rely on regulated financial institutions to operate and that these markets are segmented across jurisdictions, bringing cryptocurrencies within reach of national regulation.

JEL Classification: E42, E51, F31, G12, G28, G32, G38

Suggested Citation

Auer, Raphael and Claessens, Stijn, Regulating Cryptocurrencies: Assessing Market Reactions (September 1, 2018). BIS Quarterly Review September 2018. Available at SSRN: https://ssrn.com/abstract=3288097

Raphael Auer (Contact Author)

Bank for International Settlements (BIS) ( email )

Stijn Claessens

Bank for International Settlements ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

University of Amsterdam - Finance Group ( email )

Roetersstraat 18
Amsterdam, 1018 WB
Netherlands
+31 20 525 6020 (Phone)
+31 20 525 5285 (Fax)

HOME PAGE: http://www.fee.uva.nl/fm/index.htm

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Register to save articles to
your library

Register

Paper statistics

Downloads
56
rank
360,923
Abstract Views
188
PlumX Metrics