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The influence of European MiCa regulation on cryptocurrencies

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  • Conlon, Thomas
  • Corbet, Shaen
  • Oxley, Les

Abstract

This research investigates the relationship between impending regulatory measures, specifically the introduction of European MiCa regulations, and their influence on cryptocurrency markets. Analysing stock market responses, we highlight significant shifts in liquidity, variance, and return dynamics post-MiCa-related announcements. Specifically, such announcements are associated with significant negative cryptocurrency returns and elevated liquidity. The findings reveal defined heterogeneity across different cryptocurrency sub-classes, each uniquely affected by its inherent attributes and susceptibility to regulatory changes. This work offers insights into the nature of market responses to regulatory intervention, providing an invaluable perspective on the equilibrium between cryptocurrency market behaviour and the evolving European regulatory landscape.

Suggested Citation

  • Conlon, Thomas & Corbet, Shaen & Oxley, Les, 2024. "The influence of European MiCa regulation on cryptocurrencies," Global Finance Journal, Elsevier, vol. 63(C).
    • Handle: RePEc:eee:glofin:v:63:y:2024:i:c:s1044028324001121
    DOI: 10.1016/j.gfj.2024.101040
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    More about this item

    Keywords

    Cryptocurrency; Regulation; MiCa; Liquidity risk; Governance and policy;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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