Researchers at the Bank for international settlements (BIS) found that cryptocurrency markets respond positively to news about rule-clarifying changes in regulatory policy.
According to a working paper released by the Federal reserve Bank of Dallas ‘ globalization Institute, authored by BIS researchers Raphael Auer and Stein Claessens, cryptocurrency prices are more sensitive to regulatory changes than previously thought.
While the news about government bans cryptocurrency led to the decline in prices, the markets grew, when the regulation became clear. The document States that ” at the current stage, authorities around the world have certain opportunities for effective regulation.”
As part of the analysis of the reaction of cryptocurrency markets to news about regulation, the authors of the study suggested that the ability to enter and withdraw Fiat currencies and the presence of traditional financial organizations on the market are important for users of crypto assets:
“Why do news about national regulations have such a significant impact on cryptocurrencies that do not have a formal legal home and are traded internationally? Part of our interpretation lies in the fact that cryptocurrencies rely on regulated institutions to convert regular currency into crypto-currencies”.
The authors of the document, Raphael Auer and Stein Claessens, are researchers in the monetary and economic development Department of the Bank for international settlements. Auer is the chief economist for innovation and the digital economy,while Claessens is the head of financial stability measures.
Recently, the Bank for international settlements stated that the COVID-19 coronavirus pandemic will accelerate the widespread adoption of state-owned cryptocurrencies from Central banks. In addition, in early March, researchers at the BIS released
a report on new solutions in the field of Finance, including P2P payments, tokens-shares and government cryptocurrencies.