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Financial regulations and price inconsistencies across Bitcoin markets

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  • Pieters, Gina
  • Vivanco, Sofia

Abstract

We document significant differences in Bitcoin prices across 11 different markets representing 26% of global Bitcoin trade volume. These differences must — due to the identical nature of all bitcoin— result from characteristics of markets themselves. We examine differences across the markets and find that those which do not require customer identification for establishing an account are more likely to deviate from representative market prices than those which do, but we cannot identify an element to predict the timing or the size of the deviation. This implies that standard financial regulations, specifically know-your-customer regulations, can have a non-negligible impact on the market for Bitcoin. This finding also implies that bitcoin price data can differ across exchanges demanding a careful approach to data sourcing.

Suggested Citation

  • Pieters, Gina & Vivanco, Sofia, 2017. "Financial regulations and price inconsistencies across Bitcoin markets," Information Economics and Policy, Elsevier, vol. 39(C), pages 1-14.
  • Handle: RePEc:eee:iepoli:v:39:y:2017:i:c:p:1-14
    DOI: 10.1016/j.infoecopol.2017.02.002
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    Citations

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    Cited by:

    1. repec:eee:ecolet:v:167:y:2018:i:c:p:18-25 is not listed on IDEAS
    2. Gina Christelle Pieters, 2017. "Bitcoin Reveals Exchange Rate Manipulation and Detects Capital Controls," 2017 Papers ppi307, Job Market Papers.
    3. Elie Bouri & Rangan Gupta & Chi Keung Marco Lau & David Roubaud & Shixuan Wang, 2017. "Bitcoin and Global Financial Stress: A Copula-Based Approach to Dependence and Causality-in-Quantiles," Working Papers 201750, University of Pretoria, Department of Economics.
    4. repec:elg:eechap:17331_2 is not listed on IDEAS
    5. Gerald P. Dwyer, 2017. "Blockchain: a primer," Chapters,in: The Most Important Concepts in Finance, chapter 2, pages 12-27 Edward Elgar Publishing.
    6. Qiang Ji & Elie Bouri & Rangan Gupta & David Roubaud, 2017. "Network Causality Structures among Bitcoin and other Financial Assets: A Directed Acyclic Graph Approach," Working Papers 201729, University of Pretoria, Department of Economics.
    7. repec:fip:feddgm:00034 is not listed on IDEAS
    8. repec:eee:ecolet:v:165:y:2018:i:c:p:28-34 is not listed on IDEAS
    9. repec:eee:ecolet:v:167:y:2018:i:c:p:81-85 is not listed on IDEAS

    More about this item

    Keywords

    Bitcoin; Arbitrage; Cryptocurrency; Financial regulation;

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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