When Bitcoin is high: cryptocurrency value, illicit markets and US marijuana bills

IF 2 Q2 BUSINESS, FINANCE Journal of Financial Regulation and Compliance Pub Date : 2024-06-28 DOI:10.1108/jfrc-09-2023-0146

Savva Shanaev, Efan Johnson, Mikhail Vasenin, Humnath Panta, Binam Ghimire

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Abstract

Purpose

The purpose of this paper is to estimate the implications of illicit market use for the value of Bitcoin in an event studies framework.

Design/methodology/approach

This study uses a data set of 58 state-level marijuana decriminalisation and legalisation bills and referenda in the USA in 2010–2022.

Findings

Decriminalisation is associated with a strong and consistent positive Bitcoin price response around the event, recreational legalisation induces a more ambiguous reaction and medical legalisation is found to have a negative albeit small impact on Bitcoin value. This suggests decriminalisation enhances shadow economy use value of Bitcoin, whereas recreational and medical legalisation are not consistently reducing illicit drug cryptomarket activity. The effects are robust to various estimation windows, in subsamples, and also when outliers, heavy tails, conditional heteroskedasticity and state size are accounted for.

Originality/value

New to the literature, the choice of US marijuana bills, specifically as sample events, is based on both theoretical and empirical grounds.

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比特币高涨：加密货币价值、非法市场和美国大麻法案

本文的目的是在事件研究框架下估算非法市场使用对比特币价值的影响。研究结果非刑罪化与事件前后比特币价格强烈而一致的正向反应相关，娱乐合法化引起的反应较为模糊，而医疗合法化对比特币价值的影响虽小，但却是负面的。这表明非刑罪化提高了比特币的影子经济使用价值，而娱乐和医疗合法化并没有持续减少非法药物加密市场活动。当考虑到异常值、重尾、条件异方差和国家规模时，这些影响在不同的估计窗口、子样本中都是稳健的。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Journal of Financial Regulation and Compliance BUSINESS, FINANCE-

CiteScore

2.60

自引率

11.10%

发文量

期刊介绍： Since its inception in 1992, the Journal of Financial Regulation and Compliance has provided an authoritative and scholarly platform for international research in financial regulation and compliance. The journal is at the intersection between academic research and the practice of financial regulation, with distinguished past authors including senior regulators, central bankers and even a Prime Minister. Financial crises, predatory practices, internationalization and integration, the increased use of technology and financial innovation are just some of the changes and issues that contemporary financial regulators are grappling with. These challenges and changes hold profound implications for regulation and compliance, ranging from macro-prudential to consumer protection policies. The journal seeks to illuminate these issues, is pluralistic in approach and invites scholarly papers using any appropriate methodology. Accordingly, the journal welcomes submissions from finance, law, economics and interdisciplinary perspectives. A broad spectrum of research styles, sources of information and topics (e.g. banking laws and regulations, stock market and cross border regulation, risk assessment and management, training and competence, competition law, case law, compliance and regulatory updates and guidelines) are appropriate. All submissions are double-blind refereed and judged on academic rigour, originality, quality of exposition and relevance to policy and practice. Once accepted, individual articles are typeset, proofed and published online as the Version of Record within an average of 32 days, so that articles can be downloaded and cited earlier.