federal reserve bank of dallas report on cryptocurrency price

Federal Reserve Bank of Dallas Report on Cryptocurrency Price

The Federal Reserve Bank of Dallas assembled a report that initially questioned the efficiency of instituting actual regulations on cryptocurrencies. So, the Federal Reserve Bank of Dallas Report on Cryptocurrency Price establishes clear regulations that tend to mark serious market gains. It argued that digital assets can “function without institutional backing and are intrinsically borderless.”

Thus, regulations, more specifically national. That could not provide the necessary effect. Basically, the report informed that “at the current juncture, authorities around the globe do have some scope to make regulation effective.”

The paper examined what the consequences in terms of price developments following particular newsworthy announcements on the matter are:

“News indicating possible novel legal frameworks tailored to cryptocurrencies and initial coin offerings (ICOs) coincide with strong market gains.”

Federal Reserve Bank of Dallas Report on Cryptocurrency Price

The document specified that the introduction of a non-security legal framework generates even more favorable returns. “Most likely as those frameworks generally come with oversight rules that are milder than those under securities law,” the paper reasoned.

Bitcoin, used as an example, sees serious gains in a one-day and ten-day period, as the graph above illustrates after news of clear regulations.

Though, the cryptocurrency market operates under “no formal legal homes” and is available for international trading. It still relies on “regulated institutions to convert regular currency into cryptocurrency.” The paper’s conclusion estimated this to be the primary reason behind the price developments in light of regulations.

Wrapping Up

The report is quite clear on the matter. The cryptocurrency market marks a rapid adverse reaction on anything even remotely negative.

For instance, back in 2019, when the Chinese government clarified that digital assets are (still) illegal. Bitcoin’s price dropped to a 6-month low almost immediately.

However, the document also informed that unspecific general warnings and news regarding central bank digital currency issuance and regulation have no outlining effect.