How Does Cryptocurrency Regulation News Affect the Bitcoin Price? Bank Of International Settlements Research Reveals

Lucas Cacioli   Apr 20, 2020 05:20

New research conducted on behalf of the Bank for International Settlements indicates that contrary to popular belief, the Bitcoin price and other cryptocurrency prices respond very positively to news of incoming regulations,when they are clear.

The Dallas Federal Reserve Bank’s Globalization Institute recently published a working paper by researchers from the Bank for International Settlements which found that crypto markets react positively to clear regulations and often decline at news of central bank resistance and bans.

Crypto Markets Thrive With Clear Regulation

It may be no surprise that the official white paper reveals that cryptocurrency markets tend to take a plunge when news surfaces of a potential government or central bank imposed ban on the horizon. The findings ,however, show clear evidence of the markets surging when clear crypto regulations are announced.

News Impact Intraday Btc.jpg

Source: Federal Reserve Bank of Dallas Globalization Institute

The researchers analyzed Bitcoin and other cryptocurrencies to determine the factors that were instigating price movements in relation to official government action. Tackling the question directly, the BIS researchers wrote, Why do news events about national regulations have such a substantial impact on cryptoassets that have no formal legal homes and are traded internationally? Part of our interpretation is that cryptocurrencies rely on regulated institutions to convert regular currency into cryptocurrencies.”

The above indicates that having clear regulatory oversight when bridging the traditional markets to the crypto markets through fiat on and off-ramps are still important to crypto traders as are finding official institutional channels.  

Despite its reputation of wanting to be left well alone by regulation, the new research highlights the contrary and clearly indicates that at this fork in crypto's history, as put by the researchers,"authorities around the globe do have some scope to make regulation effective,” as the community appears to be seeking more regulatory clarity, not less.

BIS Reports on the Changes to Payment Industry and COVID Impact

As reported on April 15, the Bank for International Settlements (BIS) has previously released a quarterly report on the changes in the payment industry, including the market impact of the recent coronavirus outbreak.

Some of the trends mentioned in the report include stablecoins, tokenized securities, CBDCs, cross-border payments, and peer-to-peer payments.

The pace of change and innovations’ potential for disruption in the payments industry was one of the key takeaways of the report. In turn, this has propelled payment systems to the top of policymakers’ agenda, according to the BIS.



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