Jurisdictional arbitrage: combatting an inevitable by-product of cryptoasset regulation

Draganidis, Sideris

doi:10.1108/jfrc-02-2022-0013

Cited by 8 publications

(3 citation statements)

References 41 publications

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“…Their task is made difficult by three factors: the pseudonymity of cryptos; their propensity to change in terms of pre-determined classifications, transitioning from one category to another as the business cycle changes and the fundamental question as to whether they function as a medium of exchange like any other traditional coin or note or are instead an investment opportunity for speculators (Ammous, 2018). Draganidis (2023) has identified three alternative regulatory regimes: BitLicense, the 5th Anti-Money Laundering Directive and the European Commission's Proposal for a Regulation on Markets in Crypto-Assets. He described how national/state/ regional policymakers have already failed to create arbitrage-proof regulatory frameworks by acting exclusively within their jurisdictional limits.…”

Section: Conclusion and Recommendationsmentioning

confidence: 99%

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

Norton

2024

JFRC

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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.

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Section: Conclusion and Recommendationsmentioning

confidence: 99%

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

Norton

2024

JFRC

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“…The UK's regulatory landscape for crypto-assets has evolved significantly to accommodate the growing popularity of crypto currencies and tokens. To foster a clear understanding and provide sufficient investor protection, the UK has classified crypto-assets into three main categories: exchange tokens, security tokens and utility tokens (Draganidis 2023). Each classification holds distinct characteristics and regulatory considerations, enabling stakeholders to navigate the crypto-asset space with greater clarity and confidence.…”

Section: Classification Of Crypto-assets Under Uk Lawmentioning

confidence: 99%

Crypto-asset regulatory landscape: a comparative analysis of the crypto-asset regulation in the UK and Germany

Wronka

2024

J Asset Manag

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The purpose of this research paper is to compare and analyse how crypto-assets are regulated in the UK and Germany. The aim is to understand and highlight the approaches taken by these two countries in terms of regulating crypto-assets and to explore the potential impact that their regulatory frameworks could have on the market for these crypto-assets. The research employs a doctrinal research design to examine the crypto-asset regulatory regimes in the UK and Germany. A comprehensive review of existing literature, official regulatory documents and relevant legal frameworks is conducted to understand the core components of each country's crypto-asset regulations. The findings of this study reveal divergences in the regulatory approaches of the UK and Germany towards crypto-assets. While the UK has embraced a principles-based regulatory framework, fostering innovation and industry growth, Germany has adopted a more prescriptive and cautious approach, focusing on investor protection and market stability. The research identifies that the UK's flexible approach has attracted a flourishing crypto-asset ecosystem, while Germany's conservative stance has offered greater investor confidence. However, certain regulatory gaps and challenges persist in both jurisdictions, such as ambiguities in classification and tax treatment, requiring further attention.

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“…Arbitrageur risk profile is the name given to the risk profile of investors who monitor different markets and financial instruments to profit from price differences and perform arbitrage transactions by detecting these differences (Avdjiev et al 2022). According to Draganidis (2023), the most important advantage arbitrageur investors have in financial markets is that they make risk-free profits by taking advantage of price differences in financial markets. Stádník (2022) claimed that these investors can balance the markets by using price differences in financial markets.…”

Section: Literature Reviewmentioning

confidence: 99%

A hybrid neuro fuzzy decision-making approach to the participants of derivatives market for fintech investors in emerging economies

Rahadian,

Firli,

Dinçer

et al. 2024

Financ Innov

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The risk profiles of investors play an important role in the success of derivative products investments. It is also necessary to determine the appropriate investor profile according to the conditions of a country. This protects investors from major losses. Therefore, there is a strong need for a new study that analyzes the risk profiles of derivative products in emerging economies. This study aims to identify the most appropriate investor risk profile for derivative instruments in emerging economies. It constructs a novel decision-making model. In this model, the facial action coding system, quantum theory, spherical fuzzy sets, and multi-stepwise weight assessment ratio analysis (M-SWARA) methodology are integrated to minimize uncertainty in this process. First, three main participants of derivatives for financial technology investors are evaluated using the quantum spherical fuzzy M-SWARA technique. After that, seven emerging economies are ranked based on this performance using quantum spherical fuzzy technique for order of preference by similarity to ideal solution. The main contribution is that an appropriate investor profile is identified for financial derivative investments in emerging economies. One of the important originalities of this study is the development of a new technique called M-SWARA by making some improvements to the classical stepwise weight assessment ratio analysis method. It is concluded that hedging is the most appropriate purpose for making investments in derivative products in emerging economies. It is also identified that China has the greatest performance among the seven emerging economies regarding the appropriate purpose for making derivative investments. For the effective management of this problem in these countries, it is recommended to prevent the speculative use of derivative products with legal regulations.

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Jurisdictional arbitrage: combatting an inevitable by-product of cryptoasset regulation

Cited by 8 publications

References 41 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

Crypto-asset regulatory landscape: a comparative analysis of the crypto-asset regulation in the UK and Germany

A hybrid neuro fuzzy decision-making approach to the participants of derivatives market for fintech investors in emerging economies

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