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Bitcoin Market Segmentation and Regulatory Effect

Author

Listed:
  • Mathilde Dufouleur

Abstract

This paper examines the effects of cryptocurrency regulation on price deviations in the Bitcoin market, focusing on regulatory implementations rather than announcements. I construct a unique database of regulations across 28 countries since 2009, categorized into seven types, and analyse Bitcoin price data since September 2013. Our findings indicate that the Law of One Price does not hold in the Bitcoin market. Contrary to initial conjectures, more regulated markets exhibit higher price convergence with the USD benchmark. According to the type of regulation, this result is mixed. Regulations enhancing reliability and transparency, such as the expansion of securities laws, banking and payment regulations, and the implementation of regulatory sandboxes foster price convergence. In contrast, partial bans—primarily targeting banks—exacerbate price divergence, underscoring the significant role of financial institutions in the Bitcoin market. Additionally, anti-money laundering/countering the financing of terrorism (AML/CFT) laws reduce local prices regardless of USD price level, suggesting the cryptoasset's use in illicit activities..

Suggested Citation

  • Mathilde Dufouleur, 2026. "Bitcoin Market Segmentation and Regulatory Effect," Working papers 1052, Banque de France.
    • Handle: RePEc:bfr:banfra:1052
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    File URL: https://www.banque-france.fr/system/files/2026-07/WP1052_0.pdf
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    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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