The debate at this level needs to be centred on the determination of whether cryptocurrencies should be classified as a currency or as an intangible property Although we have a view on this point, there are differing implications that a classification will engender Where it is decided that cryptocurrencies be classified as a currency, CBN 1 will rightly exercise regulatory control, otherwise, not There are also tax considerations that arise from a classification, either way For instance, if bitcoin or other cryptocurrencies is considered a property, this classification may trigger sales tax obligations Also, a classification as an intangible property will take bitcoins (and other cryptocurrencies) out of the Exclusive Legislative List 2 in the Nigerian constitution not being a legal tender and provide state governments with the legislative competence to regulate cryptocurrencies.
{"title":"Cryptocurrency as a Property","authors":"Niji Oni & Co","doi":"10.2139/ssrn.3814888","DOIUrl":"https://doi.org/10.2139/ssrn.3814888","url":null,"abstract":"The debate at this level needs to be centred on the determination of whether cryptocurrencies should be classified as a currency or as an intangible property Although we have a view on this point, there are differing implications that a classification will engender Where it is decided that cryptocurrencies be classified as a currency, CBN 1 will rightly exercise regulatory control, otherwise, not There are also tax considerations that arise from a classification, either way For instance, if bitcoin or other cryptocurrencies is considered a property, this classification may trigger sales tax obligations Also, a classification as an intangible property will take bitcoins (and other cryptocurrencies) out of the Exclusive Legislative List 2 in the Nigerian constitution not being a legal tender and provide state governments with the legislative competence to regulate cryptocurrencies.","PeriodicalId":126646,"journal":{"name":"PSN: Exchange Rates & Currency (International) (Topic)","volume":"132 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-03-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128506241","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Alexander Guzmán, Christian A. Pinto-Gutierrez, María-Andrea Trujillo
This paper examines the impact of COVID-19 lockdowns on Bitcoin trading volume. Using data from Apple mobility trends and several time-series econometric models, we find that investors became active participants during the COVID-19 pandemic period and traded more bitcoins on days with low mobility associated with lockdown mandates. These results remain robust after controlling for stocks and gold returns, the VIX index, and the level of attention and sentiment toward Bitcoin, as measured by Google search frequencies and the tone of Tweets discussing Bitcoin. These results suggest that when individual investors have ample free time on their hands, they trade cryptocurrencies as a pastime and use the Bitcoin market as a form of entertainment. Moreover, our results have important implications concerning investors’ herding behavior and overconfidence leading to noise trader risks and bubbles typically accompanied by high trading volume in cryptocurrency markets.
{"title":"Trading Cryptocurrencies as a Pandemic Pastime: COVID-19 Lockdowns and Bitcoin Volume","authors":"Alexander Guzmán, Christian A. Pinto-Gutierrez, María-Andrea Trujillo","doi":"10.2139/ssrn.3770383","DOIUrl":"https://doi.org/10.2139/ssrn.3770383","url":null,"abstract":"This paper examines the impact of COVID-19 lockdowns on Bitcoin trading volume. Using data from Apple mobility trends and several time-series econometric models, we find that investors became active participants during the COVID-19 pandemic period and traded more bitcoins on days with low mobility associated with lockdown mandates. These results remain robust after controlling for stocks and gold returns, the VIX index, and the level of attention and sentiment toward Bitcoin, as measured by Google search frequencies and the tone of Tweets discussing Bitcoin. These results suggest that when individual investors have ample free time on their hands, they trade cryptocurrencies as a pastime and use the Bitcoin market as a form of entertainment. Moreover, our results have important implications concerning investors’ herding behavior and overconfidence leading to noise trader risks and bubbles typically accompanied by high trading volume in cryptocurrency markets.","PeriodicalId":126646,"journal":{"name":"PSN: Exchange Rates & Currency (International) (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-01-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132894593","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper studies the impacts of foreign exchange reserves intervention under the economic structures of China that feature capital controls, managed floating exchange rate and partially sterilized intervention. The central bank transacts government bonds to sterilely intervene the foreign exchange market in order to maintain a managed float regime. The results show that under the managed float regime, compared with capital account liberalization, a higher degree of capital controls may increase output and consumption and stabilize exchange rate and foreign exchange reserves in the short term. But under the case of the fixed exchange regime and capital controls, the impacts of full sterilization intervention and non-sterilization intervention are almost the same. Relative to the full floating exchange rate regime, the implementation of a managed floating exchange rate for the China’s central bank may stabilize the fluctuation of the nominal exchange rate, but it may expand the economic fluctuations, fluctuations in the scale of foreign assets held by the central bank and the scale of government bonds held the private.
{"title":"The Impacts of Foreign Exchange Reserves Intervention under the Case of Capital Control in China","authors":"Cheng Zhou","doi":"10.2139/ssrn.3763027","DOIUrl":"https://doi.org/10.2139/ssrn.3763027","url":null,"abstract":"This paper studies the impacts of foreign exchange reserves intervention under the economic structures of China that feature capital controls, managed floating exchange rate and partially sterilized intervention. The central bank transacts government bonds to sterilely intervene the foreign exchange market in order to maintain a managed float regime. The results show that under the managed float regime, compared with capital account liberalization, a higher degree of capital controls may increase output and consumption and stabilize exchange rate and foreign exchange reserves in the short term. But under the case of the fixed exchange regime and capital controls, the impacts of full sterilization intervention and non-sterilization intervention are almost the same. Relative to the full floating exchange rate regime, the implementation of a managed floating exchange rate for the China’s central bank may stabilize the fluctuation of the nominal exchange rate, but it may expand the economic fluctuations, fluctuations in the scale of foreign assets held by the central bank and the scale of government bonds held the private.","PeriodicalId":126646,"journal":{"name":"PSN: Exchange Rates & Currency (International) (Topic)","volume":"95 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-01-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116462631","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, we use a bivariate structural VAR to investigate risk spillovers from the cryptocurrency market to standard financial markets. We investigate the effects of cryptocurrency shocks on key financial markets, including the stock, bond, gold, and foreign exchange markets. The results show that cryptocurrency shocks do not have statistically significant effects on standard financial markets except for the bond market. This is consistent with most of the existing literature that argues that cryptocurrencies are mostly a new and different asset class, not related to standard factors.
{"title":"Cryptocurrency Shocks","authors":"Jinan Liu, Sajjadur Rahman, Apostolos Serletis","doi":"10.2139/ssrn.3744260","DOIUrl":"https://doi.org/10.2139/ssrn.3744260","url":null,"abstract":"In this paper, we use a bivariate structural VAR to investigate risk spillovers from the cryptocurrency market to standard financial markets. We investigate the effects of cryptocurrency shocks on key financial markets, including the stock, bond, gold, and foreign exchange markets. The results show that cryptocurrency shocks do not have statistically significant effects on standard financial markets except for the bond market. This is consistent with most of the existing literature that argues that cryptocurrencies are mostly a new and different asset class, not related to standard factors.","PeriodicalId":126646,"journal":{"name":"PSN: Exchange Rates & Currency (International) (Topic)","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-12-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121895036","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Cryptocurrency systems based on proof of stake (PoS) grant governance rights to the holders of currency tokens and therefore are vulnerable to attack by adversaries who buy tokens in order to gain control. To evaluate the robustness of PoS cryptocurrencies to such attacks, we model the market for tokens and determine how the cost of attacking the system depends on the level and shape of token supply and demand. We show that, contrary to popular belief, the appreciation of tokens in response to demand by attackers plays a small role in securing the system. In particular, stablecoins can be less vulnerable to attack than cryptocurrencies that are freely floating. Moreover, PoS cryptocurrencies that primarily function as mediums of exchange are vulnerable to attack if the velocity of money is high.
{"title":"Markets for Crypto Tokens, and Security under Proof of Stake","authors":"Christian Catalini, Ravi Jagadeesan, S. Kominers","doi":"10.2139/ssrn.3740654","DOIUrl":"https://doi.org/10.2139/ssrn.3740654","url":null,"abstract":"Cryptocurrency systems based on proof of stake (PoS) grant governance rights to the holders of currency tokens and therefore are vulnerable to attack by adversaries who buy tokens in order to gain control. To evaluate the robustness of PoS cryptocurrencies to such attacks, we model the market for tokens and determine how the cost of attacking the system depends on the level and shape of token supply and demand. We show that, contrary to popular belief, the appreciation of tokens in response to demand by attackers plays a small role in securing the system. In particular, stablecoins can be less vulnerable to attack than cryptocurrencies that are freely floating. Moreover, PoS cryptocurrencies that primarily function as mediums of exchange are vulnerable to attack if the velocity of money is high.","PeriodicalId":126646,"journal":{"name":"PSN: Exchange Rates & Currency (International) (Topic)","volume":"97 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134592477","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper uncovers a novel phenomenon, flight-to-Bitcoin, during periods of heightened policy uncertainties. Panel regressions show that Bitcoin premia, turnovers, and Web traffic on cryptocurrency exchanges all increase with economic policy uncertainties. Difference-in-differences tests exploiting local nationwide shocks further confirm this pattern. The phenomenon is driven more by the lack of confidence in local authorities and investors' risk aversion than circumventing capital controls or hedging against market crashes. We argue that the stateless and decentralized nature of BTC renders it a viable alternative investment vehicle for allaying concerns against local authorities amid turbulence.
{"title":"Flight to Bitcoin","authors":"Yangxin Yu, Jinyuan Zhang","doi":"10.2139/ssrn.3278469","DOIUrl":"https://doi.org/10.2139/ssrn.3278469","url":null,"abstract":"This paper uncovers a novel phenomenon, flight-to-Bitcoin, during periods of heightened policy uncertainties. Panel regressions show that Bitcoin premia, turnovers, and Web traffic on cryptocurrency exchanges all increase with economic policy uncertainties. Difference-in-differences tests exploiting local nationwide shocks further confirm this pattern. The phenomenon is driven more by the lack of confidence in local authorities and investors' risk aversion than circumventing capital controls or hedging against market crashes. We argue that the stateless and decentralized nature of BTC renders it a viable alternative investment vehicle for allaying concerns against local authorities amid turbulence.","PeriodicalId":126646,"journal":{"name":"PSN: Exchange Rates & Currency (International) (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-10-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130480372","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Cryptocurrency is a digital currency which acquires cryptography to secure the transactions. It is designed to make payments anonymously and in more secured way. In this paper, I first explain the detailed meaning of cryptocurrency. Then some features of trade in cryptocurrency are discussed such as the technique include the zero involvement of any governmental authority and allowing users to store and trade anonymously. Next, I demonstrate the facts and functioning of blockchain technology. It is believed that block chain technique has potential to disrupt many industries such as finance, law, banking or accounting. For the explanation of this, I state some critic point of views for the use of cryptocurrencies. It also faces criticism for vulnerabilities of the infrastructure and volatility of exchange rates. Being the nature of anonymous, cryptocurrency becomes a host for money laundering, tax evasion and other illicit activities. After this, I bring to discuss the types of cryptocurrency. Today there are thousands of cryptocurrencies with various functions and specifications. Some of the very first and famous cryptocurrencies are studied in the paper such as Bitcoin, Ethereum and XRP. The timeline of global market growth of cryptographic currencies are covered next. The idea of digital currency is not new. From 1998, Wei Dai’s ‘B-money’ concept to first ever functioning cryptocurrency ‘Bitcoin’ in 2008, many digital currencies introduced. For that some basic terminologies are bought to discuss in the paper. And lastly the journey of cryptocurrency in India is described.
{"title":"An Analysis of Cryptocurrency and Their Functioning","authors":"N. Soni","doi":"10.2139/ssrn.3683771","DOIUrl":"https://doi.org/10.2139/ssrn.3683771","url":null,"abstract":"Cryptocurrency is a digital currency which acquires cryptography to secure the transactions. It is designed to make payments anonymously and in more secured way. In this paper, I first explain the detailed meaning of cryptocurrency. Then some features of trade in cryptocurrency are discussed such as the technique include the zero involvement of any governmental authority and allowing users to store and trade anonymously. Next, I demonstrate the facts and functioning of blockchain technology. It is believed that block chain technique has potential to disrupt many industries such as finance, law, banking or accounting. For the explanation of this, I state some critic point of views for the use of cryptocurrencies. It also faces criticism for vulnerabilities of the infrastructure and volatility of exchange rates. Being the nature of anonymous, cryptocurrency becomes a host for money laundering, tax evasion and other illicit activities. After this, I bring to discuss the types of cryptocurrency. Today there are thousands of cryptocurrencies with various functions and specifications. Some of the very first and famous cryptocurrencies are studied in the paper such as Bitcoin, Ethereum and XRP. The timeline of global market growth of cryptographic currencies are covered next. The idea of digital currency is not new. From 1998, Wei Dai’s ‘B-money’ concept to first ever functioning cryptocurrency ‘Bitcoin’ in 2008, many digital currencies introduced. For that some basic terminologies are bought to discuss in the paper. And lastly the journey of cryptocurrency in India is described.","PeriodicalId":126646,"journal":{"name":"PSN: Exchange Rates & Currency (International) (Topic)","volume":"31 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-08-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127085511","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Exchange rates and international prices are endogenous – exchange rates influence export prices directly through the costs of intermediate imports, but import price inflation feeds back into the exchange rates indirectly through monetary policy. This paper shows how to quantify the causal effect of exchange rate movements on international prices by imposing micro-founded identification restrictions derived from an estimated multi-country business cycle model. It further tests whether exchange rate transmission into import prices is non-linear by replicating the observed higher-order moments of OECD export price inflation and wage growth in reduced form. The model predicts that US import prices at the border are on average 11% more elastic to USD depreciations than appreciations – the skewness of OECD export price inflation is transmitted through widespread participation in Global Value Chains (GVC). Consequently, if monetary authorities of OECD economies were equally averse to inflation and deflation, USD appreciations would not deteriorate the US trade balance by as much as it would improve when the USD depreciates.
{"title":"Are Import Prices More Elastic To Local Currency Depreciations Than Appreciations?","authors":"Justas Dainauskas","doi":"10.2139/ssrn.3884322","DOIUrl":"https://doi.org/10.2139/ssrn.3884322","url":null,"abstract":"Exchange rates and international prices are endogenous – exchange rates influence export prices directly through the costs of intermediate imports, but import price inflation feeds back into the exchange rates indirectly through monetary policy. This paper shows how to quantify the causal effect of exchange rate movements on international prices by imposing micro-founded identification restrictions derived from an estimated multi-country business cycle model. It further tests whether exchange rate transmission into import prices is non-linear by replicating the observed higher-order moments of OECD export price inflation and wage growth in reduced form. The model predicts that US import prices at the border are on average 11% more elastic to USD depreciations than appreciations – the skewness of OECD export price inflation is transmitted through widespread participation in Global Value Chains (GVC). Consequently, if monetary authorities of OECD economies were equally averse to inflation and deflation, USD appreciations would not deteriorate the US trade balance by as much as it would improve when the USD depreciates.","PeriodicalId":126646,"journal":{"name":"PSN: Exchange Rates & Currency (International) (Topic)","volume":"42 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123784364","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using international holdings data, we estimate a demand system for financial assets across 36 countries. The demand system provides a unified framework for decomposing variation in exchange rates, long-term yields, and stock prices; interpreting major economic events such as the European sovereign debt crisis; and estimating the convenience yield on US assets. Macro variables and policy variables (i.e., short-term rates, debt quantities, and foreign exchange reserves) account for 55 percent of the variation in exchange rates, 57 percent of long-term yields, and 69 percent of stock prices. The average convenience yield is 2.15 percent on US long-term debt and 1.70 percent on US equity.
{"title":"Exchange Rates and Asset Prices in a Global Demand System","authors":"R. Koijen, Motohiro Yogo","doi":"10.2139/ssrn.3383677","DOIUrl":"https://doi.org/10.2139/ssrn.3383677","url":null,"abstract":"Using international holdings data, we estimate a demand system for financial assets across 36 countries. The demand system provides a unified framework for decomposing variation in exchange rates, long-term yields, and stock prices; interpreting major economic events such as the European sovereign debt crisis; and estimating the convenience yield on US assets. Macro variables and policy variables (i.e., short-term rates, debt quantities, and foreign exchange reserves) account for 55 percent of the variation in exchange rates, 57 percent of long-term yields, and 69 percent of stock prices. The average convenience yield is 2.15 percent on US long-term debt and 1.70 percent on US equity.","PeriodicalId":126646,"journal":{"name":"PSN: Exchange Rates & Currency (International) (Topic)","volume":"13 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127481135","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We propose a model of entrepreneurial finance where start-ups raise capital via Initial Coin Offering (ICO) and/or traditional funding methods such as Venture Capital (VC). While token sales allow startups to leverage network externalities, VC's value-adding services enhance profitability. We show that, even when projects have large potential network effects, ICOs may not be optimal if entrepreneurial ability is low and the share of speculators among investors is large. Moreover, despite the complementarity between network effects and value-adding services, entrepreneurs combine VC and ICO funding only in highly efficient VC markets and for projects with moderate network externalities. Using data on funding rounds of blockchain startups, we empirically validate the main assumptions and implications of the model.
{"title":"(R)Evolution in Entrepreneurial Finance? The Relationship between Cryptocurrency and Venture Capital Markets","authors":"K. Shakhnov, Luana Zaccaria","doi":"10.2139/ssrn.3613261","DOIUrl":"https://doi.org/10.2139/ssrn.3613261","url":null,"abstract":"We propose a model of entrepreneurial finance where start-ups raise capital via Initial Coin Offering (ICO) and/or traditional funding methods such as Venture Capital (VC). While token sales allow startups to leverage network externalities, VC's value-adding services enhance profitability. We show that, even when projects have large potential network effects, ICOs may not be optimal if entrepreneurial ability is low and the share of speculators among investors is large. Moreover, despite the complementarity between network effects and value-adding services, entrepreneurs combine VC and ICO funding only in highly efficient VC markets and for projects with moderate network externalities. Using data on funding rounds of blockchain startups, we empirically validate the main assumptions and implications of the model.","PeriodicalId":126646,"journal":{"name":"PSN: Exchange Rates & Currency (International) (Topic)","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-05-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124542852","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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