The influence of European MiCa regulation on cryptocurrencies

Thomas Conlon, Shaen Corbet and Les Oxley

Global Finance Journal, 2024, vol. 63, issue C

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.

Keywords: Cryptocurrency; Regulation; MiCa; Liquidity risk; Governance and policy (search for similar items in EconPapers)
JEL-codes: G14 G18 G23 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:63:y:2024:i:c:s1044028324001121

DOI: 10.1016/j.gfj.2024.101040

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