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Risk is in the eye of the investor: Cryptocurrency investors’ engagement with risk, regulatory advice, and regulatory institutions

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  • Sobolev, Daphne
  • Kallinterakis, Vasileios

Abstract

Despite regulators’ warnings that investing in cryptoassets is highly risky, cryptocurrency investments are prevalent. To explore investors’ engagement with regulatory risk advice, we conducted two surveys. Cryptocurrency investors residing in the UK and the US were asked about their interpretation of the notion of risk, awareness of regulatory risk advice, and attitudes towards the advice and the regulators. Investors were also asked whether they followed the advice. Qualitative content analysis of their answers suggests that people often invest in cryptocurrencies although they understand the risks involved and are aware of the regulators’ advice. They do so due to their risk propensity, self-reliance, criticism of the informativeness of the advice, or attitudes towards regulators. Furthermore, negative attitudes towards regulators often stem from lack of trust and the perception that regulators are dated. This study suggests that regulators could benefit investors by providing them with more informative advice and addressing their attitudes.

Suggested Citation

  • Sobolev, Daphne & Kallinterakis, Vasileios, 2024. "Risk is in the eye of the investor: Cryptocurrency investors’ engagement with risk, regulatory advice, and regulatory institutions," Journal of Behavioral and Experimental Finance, Elsevier, vol. 44(C).
    • Handle: RePEc:eee:beexfi:v:44:y:2024:i:c:s2214635024001096
    DOI: 10.1016/j.jbef.2024.100994
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    References listed on IDEAS

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    More about this item

    Keywords

    Cryptocurrency; Risk assessment; Regulation; Investor behavior; Behavioral finance; Judgment and decision-making;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G4 - Financial Economics - - Behavioral Finance
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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