Regulation Spillovers Across Cryptocurrency Markets
16 Pages Posted: 22 Apr 2019 Last revised: 7 Oct 2019
Date Written: April 17, 2019
Several countries have already introduced restrictions on trading of cryptocurrencies, and many more are evaluating whether to follow suit. We document an unprecedented drop in trading volume on the Chinese cryptocurrency market after a recent regulatory change by the Chinese authorities that severely restricted bitcoin trading. This paper shows how changes in domestic regulation not only have large effects on the domestic cryptocurrency market but also produce large international spillovers. Specifically, we observe a large increase in trading volume and relative bitcoin prices in exchange for Korean won, Japanese yen, and U.S. dollars, and on Chinese peer-to-peer exchanges.
Keywords: Bitcoin, Trading Volume, Regulation, China
JEL Classification: G14, G15, G18
Suggested Citation: Suggested Citation