Study Finds Crypto Regulation Can Lead to More Efficient Markets
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Research finds that more regulated cryptocurrencies create more efficient markets. Regulation can help protect investors and provide reliable information.
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Cryptocurrency exchanges that provide some rules and vetted information act as "minimal regulation" that makes markets more efficient.
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Unregulated initial coin offerings (ICOs) were the least efficient. But exchange-regulated initial exchange offerings (IEOs) were almost as efficient as stock initial public offerings (IPOs).
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The exchange-based crypto regulation is voluntary but could guide lawmakers interested in regulating these emerging markets.
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The research analyzed variance ratios to measure predictability of future asset prices. Less predictable prices indicate more efficient markets with less uneven access to insider information.