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Kick down the ladder? The impact of cryptocurrency bans on company legal risks and employee structure

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  • Xu, Yi
  • Qi, Jiajun
  • Chen, Jilong
  • Feng, Lingbing

Abstract

This paper investigates the impact of cryptocurrency bans on company legal risks using a Difference-in-Differences framework. We find that such bans significantly reduce both the frequency and monetary value of lawsuits, lowering companies' legal exposure. Additionally, our analysis reveals that employees with financial backgrounds play a crucial role in helping companies mitigate legal risks in response to the ban's impact. However, as cryptocurrency-related financial activities are gradually phased out, the importance of these financially-skilled employees diminishes. Consequently, companies tend to "kick down the ladder" by dismissing these employees, highlighting an unintended consequence of the regulatory shift.

Suggested Citation

  • Xu, Yi & Qi, Jiajun & Chen, Jilong & Feng, Lingbing, 2025. "Kick down the ladder? The impact of cryptocurrency bans on company legal risks and employee structure," Finance Research Letters, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:finlet:v:78:y:2025:i:c:s1544612325004490
    DOI: 10.1016/j.frl.2025.107186
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