Cryptocurrency regulation and market quality

Griffith, Todd G.; Clancey-Shang, Danjue

doi:10.1016/j.intfin.2023.101744

Cited by 26 publications

(6 citation statements)

References 32 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Implicit in Chiu's observation is a view that over-regulation can stifle financial innovation. This coincides with research by Griffith and Clancey-Shang (2023), which found that an outright ban on cryptos by the Chinese authorities in 2021 led to a market-wide price drop, a spike in volatility and a deterioration in price resilience. Accordingly, a systemic and not a sectoral approach should be adopted, the latter being the regulatory field for finance, the former being a more broad-based regulatory agenda that extends beyond financial sectoral regulation.…”

Section: The Usa Perspectivesupporting

confidence: 88%

Free banking theory: literature review and relevance to the regulation of cryptocurrencies debate

Norton

2024

JFRC

View full text Add to dashboard Cite

Purpose Free banking theory, as developed in Adam Smith’s 1776 treatise, “The Wealth of Nations” is a useful tool in determining the extent to which the “invisible hand of the market” should prevail in regulatory policy. The purpose of this study is to provide a timely review of the literature, evaluating the theory’s relevance to regulation of financial technology generally and cryptocurrencies (cryptos) specifically. Design/methodology/approach The methodology is qualitative, applying free banking theory as developed in the literature to technology-defined environments. Recent legislative developments in the regulation of cryptocurrencies in the UK, European Union and the USA, are drawn upon. Findings Participants in volatile cryptocurrency markets should bear the consequences of inadvisable investments in accordance with free banking theory. The decentralised nature of cryptocurrencies and the exchanges on which these are traded militate against coordinated oversight by central banks, supporting a qualified free banking approach. Differences regarding statutory definitions of cryptos as units of exchange, tokens or investment securities and the propensity of these to transition between categories across the business cycle render attempts at concerted classification at the international level problematic. Prevention of criminality through extension of Suspicious Activity Reporting to exchanges and intermediaries should be the principal objective of policymakers, rather than definitions of evolving products that risk stifling technological innovation. Originality/value The study proposes that instead of a traditional regulatory approach to cryptos, which emphasises holders’ safety and compensation, a free banking approach combined with a focus on criminality would be a more effective and pragmatic way forward.

show abstract

Section: The Usa Perspectivesupporting

confidence: 88%

Free banking theory: literature review and relevance to the regulation of cryptocurrencies debate

Norton

2024

JFRC

View full text Add to dashboard Cite

show abstract

“…Locke (2021) supports our assertion by identifying contributing factors regarding why BTC price can be used to predict its traded volume, such as El Salvador's acceptance of BTC as a legal currency and Elon Musk's endorsement, which led to Bitcoin's market value surpassing $1 trillion in 2021. By contrast, the announcement of China's ban on cryptocurrency resulted in a significant decline in market prices and a reduction in liquidity (Griffith and Clancey-Shang 2023). This depicts a bad information flow.…”

Section: Discussionmentioning

confidence: 97%

Exploring the nexus between price and volume changes in the cryptocurrency market

2023

View full text Add to dashboard Cite

The analysis of the price-volume relationship offers valuable insights into the underlying dynamics of financial markets, enabling investors and market participants to make informed inferences based on the data derived from price and volume. This concept has extensively been studied in the stock market, while it remained understudied in the cryptocurrency trading system. The study aims to contribute to the literature by examining the causal relationship between price changes and trading volume for the top three cryptocurrencies (Bitcoin, Ethereum and Tether) listed on CoinMarketCap. Previous research that examined causal relationship focused on Bitcoin and Ethereum, while neglecting Tether, which is often used by investors to avoid price volatility. The study employs correlation matrix, vector autoregression Model, and granger causality to conduct the analysis of the research. The data for this study were extracted from CoinMarketCap, which provides the daily closing price and 24 hours traded volume of the top three cryptocurrencies from January 1, 2016 to December 31, 2021. The outcome of the preliminary study suggested that there is a positive significant price-volume relationship for Bitcoin and Ethereum, while there is a negative relationship for Tether. Furthermore, the study exhibits that there is a unidirectional causality between price return and volume change of Bitcoin and Ethereum, while there is no evidence of causality for Tether. Therefore, the empirical results establish the reliability of variable forecasting, empowering market participants and investors to make informed investment decisions.

show abstract

“…The influence of regulatory and cybersecurity-related events on crypto-assets prices is widely acknowledged (Corbet et al, 2019;Shanaev et al, 2020). Subsequently, such events influence the investors' behavior, impacting the crypto-market's volatility (Griffith and Clancey-Shang, 2023). It was also proved that crypto-assets suffer from contagion effects (herding behavior)(da Gama Silva et al, 2019).…”

Section: Total Market Riskmentioning

confidence: 99%

Risk analyses of the crypto-market: A literature review

Dumas,

Jimenez-Garcès,

Soiman

2024

SSRN Journal

View full text Add to dashboard Cite

Cryptocurrency regulation and market quality

Cited by 26 publications

References 32 publications

Free banking theory: literature review and relevance to the regulation of cryptocurrencies debate

Free banking theory: literature review and relevance to the regulation of cryptocurrencies debate

Exploring the nexus between price and volume changes in the cryptocurrency market

Risk analyses of the crypto-market: A literature review

Contact Info

Product

Resources

About