🏦 [Analysis] Regulating cryptocurrencies: assessing market reactions - Bank for International Settlements

Cryptocurrencies are often thought to operate out of the reach of national regulation, but valuations, trading, and user sentiment react substantially to news about regulatory actions, according to a new report from the Bank for International Settlements. Through an event study approach the BIS examined whether, and how, regulatory actions and communications about regulation have affected cryptocurrency markets. Key takeaways include:

• Cryptocurrencies such have attracted much attention due to price, but have also raised concerns for regulators.
• News related to bans on cryptocurrencies or their treatment under securities law led to the greatest market declines, followed by news related to money laundering, terrorist financing, or restrictions on cryptocurrencies in relation to regulated markets.
• News related to the establishment of legal frameworks specifically for cryptocurrencies or ICOs were tied to the strongest market gains.
• Because cryptocurrencies are still reliant on regulated financial institutions and markets are still segmented across jurisdictions, they are within the reach of national regulation.

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