The development of the cryptocurrency market and its growing integration into the global financial system has heightened the debate about the risks of cryptoassets to both the global financial system ...and national financial systems. This paper analyzes the main risks associated with cryptoassets, highlighted both internationally and nationally. These include consumer risks; money laundering and terrorist financing risks; environmental risks; and financial stability risks. The main purpose of the study is to identify the risks of cryptocurrencies in relation to the Russian financial market. Although the risks are identical due to the extraterritorial nature of cryptoassets, the impact of these risks on countries' national financial systems differs significantly. Financial sanctions against Russia also force us to reconsider our established approaches to the assessment of existing cryptoasset risks. Russia has the technological and organizational capacity to mitigate most of the risks. An objective assessment of existing risks and development of balanced approaches to their management open up opportunities for creating a domestic crypto market and using cryptoassets to overcome the sanctions pressure on the Russian financial market.
FINANCE REFLECTED BY FUNHOUSE MIRRORS Marcus Paulus de Oliveira Rosa; Lucas Caminha
Revista de Estudos Institucionais,
08/2023, Volume:
9, Issue:
2
Journal Article
Peer reviewed
Open access
Money is money, securities are securities, and banking is banking. Their fundamentals are not changed by whether technology rails are centralized (classic) or pseudo-decentralized (virtual assets) – ...the song remains the same. As such, this paper does not reinvent the wheel on why we should regulate cryptoasset centralized exchanges (CEXs), as there is enough bibliography from today to the XVII century to go around on that. Instead, we focus on how to regulate the CEXs, which comes into play in a world where their distributed ledger technology (DLT) rails are off-the-grid and hinder regulators from: (i) collecting market data (information asymmetry); and (ii) practical enforcement (technology/operational asymmetry). After revising current regulatory practices from various countries, we identify grounds for a practical approach – we propose that regulators might enforce full trading/financial intermediation obligations on the CEXs by enacting an indirect regulation/gatekeeper scheme, as inspired by the U.S. Foreign Account Tax Compliance Act (FATCA). In this model, regulators would restrict traditional institutions (i.e., banks, broker-dealers, clearings, funds) from transacting with CEXs which do not provide adequate evidence of material compliance with their trading/financial intermediation obligations. On a final remark, we narrate a growing movement which aims to insulate non-compliant crypto from the financial systems altogether, avoiding risks of contagion.
Criptoactivos Reinhart Schuller, Robert
Cuadernos de derecho transnacional,
10/2022, Volume:
14, Issue:
2
Journal Article
Los criptoactivos han emergido durante los últimos años como algo muy atractivo entre la población, pero a la vez han supuesto un verdadero quebradero de cabeza para el legislador y diferentes países ...del mundo. La novedad y la trascendencia transfronteriza obliga a acudir a distintos proyectos normativos, recomendaciones de utoridades, así como a doctrina comparada. En el presente trabajo se afronta el difícil reto de encajar a los criptoactivos en el ordenamiento jurídico español, sin menoscabo de proponer una serie de mejoras o sugerencias a nivel europeo. Para afrontar el desafío con seguridad y certeza, será necesario vislumbrar las bases tecnológicas de blockchain, también conocido como DLT.
Ever since the Global Financial Crisis, the financial system has seen an accelerated level of innovation. Bitcoin offered a decentralized alternative to money, with thousands of other cryptoassets ...quickly emerging. Most recently, Decentralized Finance (DeFi) promises to offer a new digital economy, with smart contracts replacing the need for financial intermediaries. This new market aims to reinvent traditional financial products in a more transparent and interoperable way. In this paper we aim to undertake an extensive literature review of the financial stability risks posed by the fast-growing DeFi market and assess these using the Financial Stability Board’s fintech framework. We find that DeFi could pose several challenges to traditional financial infrastructure, primarily by increasing interlinkages between cryptoassets and traditional financial markets. However, if DeFi evolves in a safe way, it could increase competition and financial inclusion with overall positive implications for financial stability.
•Position of stablecoins in the cryptomarkets is examied.•Directional spillovers within the generalized VAR are utilized.•No evidence of stablecoins boosting other cryptoassets prices is ...found.•Stablecoins issuances come regularly after other prices increases.
Stablecoins and their leader Tether have been one of the controversial topics of cryptomarkets and their role in price rallies of the past few years has been questioned repeatedly. Using the generalized vector autoregressive framework and directed spillovers based on the forecast error variance decompositions, we find no evidence of stablecoins boosting the prices of other cryptoassets. On the contrary, the increased stablecoins issuances come in reaction to the other cryptoassets price changes, which suggests they rather reflect increasing demand in investing into the cryptomarkets that gets materialized in demand for the “digital fiat”.
The article deals with constructing an asset accounting process and an algorithm for recognizing an object as an asset. The main approaches to the reflection of cryptocurrency in financial accounting ...are analyzed. The study showed that International Financial Reporting Standards (IFRS) still lack specific clarifications on the correctness of accounting and recognition of cryptocurrencies. Cryptocurrencies are suggested to be recognized as, intangible assets on the one hand, and as inventories, on the other. The research shows that before starting the process of accounting for any asset, it is necessary to determine, whether such a resource meets the definition of an asset. The article proves that cryptocurrency is an asset. However, attaching cryptocurrency to a certain group of assets turns out to be rather problematic. The main approaches to doing it are analyzed. Speaking formally, cryptocurrency is considered to be cash or cash equivalents. Cash and cryptocurrencies have been compared, and the main distinguishing features of these two assets have been considered. The conclusion is made that cryptocurrency should be evaluated at fair value, indicating the date of evaluation to fix actual market conditions. The measure of cryptocurrency when reflected in the financial reporting is the US dollar or its equivalent in the national currency as at the balance sheet date. The research has shown that depending on the type of the enterprise activity, cryptocurrency should be determined in the financial reporting, or the «balance sheet», as «intangible assets» (line code 1000), and the primary value of such an asset corresponds to line 1001, or inventories (line code 1100). Also, if the company’s accounting policy states that cryptocurrency is a financial investment, it should be reflected in line 1160.
Safe havens for Bitcoin Nedved, Martin; Kristoufek, Ladislav
Finance research letters,
January 2023, 2023-01-00, Volume:
51
Journal Article
Peer reviewed
We examine whether gold, crude oil, and stock markets could serve as safe havens for Bitcoin. As an investor into cryptoassets faces high risk when holding for longer periods and might be interested ...in diversifying and hedging outside of cryptoassets, these traditional assets might be of interest. We find that Bitcoin moves together with the stock markets but oil and gold can serve as safe havens. Specifically gold is identified as a strong safe haven for Bitcoin. In addition, we describe the evolution of the stocks–Bitcoin nexus which unveils in the safe haven discussion. Our results aim to lay foundations for further discussions into the topic of safe havens for cryptoassets as these are becoming increasingly standard part of investors’ portfolios, being it institutional or retail, and thus protection against their extreme movements and diversifications of their risk will play an important role in the investors’ decision making.
•Gold, crude oil, and stock markets are examined as possible safe havens for Bitcoin.•Bitcoin moves together with the stock markets.•Crude oil and gold can serve as safe havens for Bitcoin.
The papers in this special issue focus on the emerging phenomenon of cryptocurrencies. Cryptocurrencies are digital financial assets, for which ownership and transfers of ownership are guaranteed by ...a cryptographic decentralized technology. The rise of cryptocurrencies’ value on the market and the growing popularity around the world open a number of challenges and concerns for business and industrial economics. Using the lenses of both neoclassical and behavioral theories, this introductory article discusses the main trends in the academic research related to cryptocurrencies and highlights the contributions of the selected works to the literature. A particular emphasis is on socio-economic, misconduct and sustainability issues. We posit that cryptocurrencies may perform some useful functions and add economic value, but there are reasons to favor the regulation of the market. While this would go against the original libertarian rationale behind cryptocurrencies, it appears a necessary step to improve social welfare.
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