Money Laundering Risk in Cryptocurrency Trading Activities: Sources, Evidence and Implications from the 5 Most Traded and Valued Cryptocurrencies

Abstract

The main purpose of this study is to investigate risk and return, in 5 crypto currencies (BTC, ETH, BNB, XRP, DOGE) that have the highest transaction volume and market capitalization. Needless to say, there are now a large number of digital currencies on the market that some coins have a futuristic and practical whitepaper that shows they have the potential to grow day by day in the future, which has made them very significant elements for investment. An extensive empirical study was performed using ten consecutive years of crypto currency data by using the closing and return prices on a monthly basis between 2010 and 2020. Those were examined and tested using various such as single root test, co-integration test, and using regression analyses. Our findings cast doubt on explanations that the behavior of crypto currencies in the future of block chain technology is similar to stocks. At the same time, the returns of crypto currency can be predicted by two factors specific to its marketsmomentum and investors' attention.