Assessing the future prospects for cryptocurrencies

Abstract

Cryptocurrencies are attracting considerable attention around the world because of the various advantages that they offer. On the other hand, they also carry some inherent risks. Although monetary authorities broadly agree that cryptocurrencies do not engender an immediate threat to national and global financial systems, the future is full of unknowns. In this regard, drawing a framework based on the current drivers of demand for cryptocurrencies would help visualize the prospects for these assets and create a roadmap to avoid or manage any disruptive risks. This discussion paper aims to contribute to the literature by examining the key factors that will determine the future performance of cryptocurrencies. The main conclusion derived from the discussion is that national regulations will potentially affect the direction of cryptocurrencies, as well as the need for any special efforts in the domain of monetary policy

Keywords: {'name': 'Cryptocurrencies, demand, anonymity, regulations, financial stability'}

Authors & affiliations

Hatice Karahan
Affiliation not supplied

Deposited references

Supplied references, not a list of publications citing this article.

DOI: 10.2139/ssrn.2832769

DOI: 10.1016/j.ribaf.2018.09.011

Auer R. & Claessens, S. (2018, September). Regulating cryptocurrencies: Assessing market reactions. BIS Quarterly Review, 51-65. https://www.bis.org/publ/qtrpdf/r_qt1809f.htm

Bank of England (2014). The economics of digital currencies. BOE Quarterly Bulletin, 54 (3). https://www.bankofengland.co.uk/quarterly-bulletin/2014/q3/the-economics-of-digital-currencies

Bank of International Settlements (2018). Cryptocurrencies: Looking beyond the hype. Annual Economic Report. https://www.bis.org/publ/arpdf/ar2018e5.htm

CipherTrace Cryptocurrency Intelligence (2018). Q3 Cryptocurrency anti-money laundering report. https://ciphertrace.com/pr-crypto-aml-report-2018q3/

Claeys G., Demertzis M. & Efstathiou, K. (2018). Cryptocurrencies and monetary policy. Bruegel Policy Contribution 10. http://bruegel.org/2018/06/cryptocurrencies-and-monetary-policy/

DOI: 10.1016/j.frl.2018.01.005

DOI: 10.1038/526021a

DOI: 10.2139/ssrn.3253248

DOI: 10.2139/ssrn.3102645

Gurguc, Z. & Knottenbelt, W. (2018). Cryptocurrencies: overcoming barriers to trust and adoption. Imperial College London. https://www.imperial.ac.uk/media/imperial-college/research-centres-and-groups/ic3re/cryptocurrencies--overcoming-barriers-to-trust-and-adoption.pdf

DOI: 10.1007/978-3-030-25275-5

DOI: 10.1016/j.dss.2020.113473

Hughes, S. J. & Middlebrook, S.T. (2015). Advancing a framework for regulating cryptocurrency payments intermediaries, Yale Journal on Regulation, 32, 495–559. http://digitalcommons.law.yale.edu/yjreg/vol32/iss2/8

DOI: 10.1007/978-3-662-45472-5_30

Lo, S. & Wang, J.C. (2014). Bitcoin as money? Current Policy Perspectives 14-4, Federal Reserve Bank of Boston. https://www.bostonfed.org/publications/current-policy-perspectives/2014/bitcoin-as-money.aspx

Marian, O. (2013). Are cryptocurrencies “super” tax havens? Michigan Law Review First Impressions, 112, 38-48. http://scholarship.law.ufl.edu/facultypub/358.

DOI: 10.1145/2504730.2504747

U.S. Treasury (2018). National money laundering risk assessment. https://home.treasury.gov/system/files/136/2018NMLRA_12-18.pdf

Wolla, S.A. (2018, March). Bitcoin: Money or financial investment? Page One Economics. Federal Reserve Bank of St. Louis. https://research.stlouisfed.org/publications/page1-econ/2018/03/01/bitcoin-money-or-financial-investment

DOI: 10.3386/w19747

Zamani, E. D. & Babatsikos, I. (2017). The use of bitcoins in light of the financial crisis: The case of Greece. In the 11th Mediterranean Conference on Information Systems (MCIS), Proceedings 5. Genoa, Italy.