The Current Status of Cryptocurrency Regulation in China and Its Effect around the World

Riley, John G.

doi:10.14330/cwr.2021.7.1.06

Cited by 35 publications

(16 citation statements)

References 4 publications

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“…Second, no existing studies report on how environmental attention on cryptocurrencies can shock the cryptocurrency markets and not even the literature examining which financial or economic variables are susceptible to shocks transmitted by cryptocurrency environmental attention. Third, no clear and substantial regulations or policies consider the environmental issues related to cryptocurrency (Klein et al, 2019;Chudinovskikh and Sevryugin, 2019;Shanaev et al, 2020;Riley, 2021) [4].…”

Section: Introductionmentioning

confidence: 99%

An index of cryptocurrency environmental attention (ICEA)

Wang

Lucey

Vigne

et al. 2022

CFRI

114

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Purpose(1) A concern often expressed in relation to cryptocurrencies is the environmental impact associated with increasing energy consumption and mining pollution. Controversy remains regarding how environmental attention and public concerns adversely affect cryptocurrency prices. Therefore, the paper aims to introduce the index of cryptocurrency environmental attention (ICEA), which aims to capture the relative extent of media discussions surrounding the environmental impact of cryptocurrencies. (2) The impacts of cryptocurrency environmental attention on long-term macro-financial markets and economic development remain part of undeveloped research fields. Based on these factors, the paper will further examine the effects of the ICEA on financial markets or economic developments.Design/methodology/approach(1) The paper introduces a new index to capture cryptocurrency environmental attention in terms of the cryptocurrency response to major related events through gathering a large amount of news stories around cryptocurrency environmental concerns – i.e. >778.2 million news items from the LexisNexis News & Business database, which can be considered as Big Data – and analysing that rich dataset using variety of quantitative techniques. (2) The vector error correction model (VECM) and structural VECM (SVECM) [impulse response function (IRF), forecast error variance decomposition (FEVD) and historical decomposition (HD)] are useful for characterising the dynamic relationships between ICEA and aggregate economic activities.Findings(1) The paper has developed a new measure of attention to sustainability concerns of cryptocurrency markets' growth, ICEA. (2) ICEA has a significantly positive relationship with the UCRY indices, volatility index (VIX), Brent crude oil (BCO) and Bitcoin. (3) ICEA has a significantly negative relationship with the global economic policy uncertainty (GlobalEPU) and global temperature uncertainty (GTU). Moreover, ICEA has a significantly positive relationship with the industrial production (IP) in the short term, whilst having a significantly negative relationship in the long term. (4) The HD of the ICEA displays higher linkages between environmental attention, Bitcoin and UCRY indices around key events that significantly change the prices of digital assets.Research limitations/implicationsThe ICEA is significant in the analysis of whether cryptocurrency markets are sustainable regarding energy consumption requirements and negative contributions to climate change. Understanding of the broader impacts of cryptocurrency environmental concerns on cryptocurrency market volatility, uncertainty and environmental sustainability should be considered and developed. Moreover, the paper aims to point out future research and policy legislation directions. Notably, the paper poses the question of how cryptocurrency can be made more sustainable and environmentally friendly and how governments' cryptocurrency policies can address the cryptocurrency markets.Practical implications(1) The paper develops a cryptocurrency environmental attention index based on news coverage that captures the extent to which environmental sustainability concerns are discussed in conjunction with cryptocurrencies. (2) The paper empirically investigates the impacts of cryptocurrency environmental attention on other financial or economic variables [cryptocurrency uncertainty (UCRY) indices, Bitcoin, VIX, GlobalEPU, BCO, GTU index and the Organisation for Economic Co-operation and Development IP index]. (3) The paper provides insights into making the most effective use of online databases in the development of new indices for financial research.Social implicationsWhilst blockchain technology has a number of useful implications and has great potential to transform several industries, issues of high-energy consumption and CO2 pollution regarding cryptocurrency have become some of the main areas of criticism, raising questions about the sustainability of cryptocurrencies. These results are essential for both policy-makers and for academics, since the results highlight an urgent need for research addressing the key issues, such as the growth of carbon produced in the creation of this new digital currency. The results also are important for investors concerned with the ethical implications and environmental impacts of their investment choices.Originality/value(1) The paper provides an efficient new proxy for cryptocurrency and robust empirical evidence for future research concerning the impact of environmental issues on cryptocurrency markets. (2) The study successfully links cryptocurrency environmental attention to the financial markets, economic developments and other volatility and uncertainty measures, which has certain novel implications for the cryptocurrency literature. (3) The empirical findings of the paper offer useful and up-to-date insights for investors, guiding policy-makers, regulators and media, enabling the ICEA to evolve into a barometer in the cryptocurrency era and play a role in, for example, environmental policy development and investment portfolio optimisation.

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Section: Introductionmentioning

confidence: 99%

An index of cryptocurrency environmental attention (ICEA)

Wang

Lucey

Vigne

et al. 2022

CFRI

114

View full text Add to dashboard Cite

show abstract

“…Riley reviewed the current cryptocurrency regulation and in particular some of China's measures in this regard, including an analysis of current Chinese cryptocurrency laws and the new Chinese cryptography law. It also explained the role of recent developments in Chinese regulatory policy in shaping the development of the global cryptocurrency market [7]. Pelucio-Grecco et al tried to give their view on the accounting treatment of bitcoins.…”

Section: Related Researchmentioning

confidence: 99%

Exploration of the Problems of Virtual Currency and Potential Solutions

Tang¹,

Wang²

2022

Advances in Economics, Business and Management Research

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In recent years, virtual currency has become an international hot topic. At the same time, virtual currency also ushered in unprecedented development. How to effectively regulate virtual currency becomes a problem worth discussing. This paper first analyses the development of virtual currency with Bitcoin as the representative. It is concluded that virtual currency has great instability, which means that there are some problems with virtual currency. The problems of virtual currency are mainly reflected in the potential impact on the market and loopholes in legal regulation. Therefore, the regulatory measures proposed in this paper are also analyzed from two aspects of market operation and legal regulation. In addition, Central Bank Digital Currency (CBDC) is also a good idea.

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“…What impact does the digitalization of national currencies, the rise of blockchain‐based private money, and other innovative financial technologies have on the monetary sovereignty of states? The rapid growth of cryptocurrencies is receiving critical attention from lawmakers and regulatory agencies worldwide (Auer & Claessens, 2018; Galavis, 2019; PBOC, 2021; Riley, 2021). Their development has ignited debates among policymakers and theorists on the transformative implications for international monetary governance, financial systems, and public policy (Bilotta & Botti, 2021; Brunnermeier et al, 2019; Campbell‐Verduyn & Bernards, 2019; Campbell‐Verduyn, 2017; Rose, 2015).…”

Section: Introductionmentioning

confidence: 99%

Digital currencies, monetary sovereignty, and U.S.–China power competition

Huang

Mayer

2022

Policy & Internet

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The rise of digital currencies challenges practices of monetary sovereignty and impacts the international monetary order. Drawing on recent IPE debates about the public‐private nature of money, the critique of the “impossible trinity” and “territorial currencies,” this article explores the competition between China and the United States over and within the international monetary system. The two largest economies display strikingly divergent regulatory approaches to cryptocurrencies and Central Bank Digital Currency (CBDC). China completely banned cryptocurrencies but became a front‐runner in developing a CBDC. It aims to expand the RMB's global role without giving up its monetary control. U.S. administrations have instead reluctantly considered regulating cryptocurrencies. Discussions on a potential digital U.S. dollar (USD) only began in 2020. Washington aims at preserving the existing cross‐border financial mechanisms and offshore infrastructure for USD‐denominated transactions and credit creation. It focuses on financial crime and maintaining the innovation dynamic of its private sector to preserve its “exorbitant privilege.” Emerging financial infrastructures and standards for digital currencies are the new technological arena for U.S.–China monetary competition.

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The Current Status of Cryptocurrency Regulation in China and Its Effect around the World

Cited by 35 publications

References 4 publications

An index of cryptocurrency environmental attention (ICEA)

An index of cryptocurrency environmental attention (ICEA)

Exploration of the Problems of Virtual Currency and Potential Solutions

Digital currencies, monetary sovereignty, and U.S.–China power competition

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