Bitcoin: Speculative Bubble, Financial Risk and Regulatory Response

Lerong Lu

Research output: Contribution to journalArticle (Academic Journal)

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Abstract

In this article, the author tracks developments in bitcoin trading and considers regulatory responses. 2017 has witnessed a so-called bitcoin bubble, as entrepreneurs and professional investors rushed into the market to take a bet on the upcoming cryptocurrency age. The price of a bitcoin exceeded $19,300 in December 2017, worth only $0.06 in July 2010. The popularity of bitcoin mining and trading activities has raised legal and regulatory concerns pertaining to anti-money laundering, evasion of forex regulations, the illegal fundraising of start-ups by Initial Coin Offerings (ICOs), as well as a potential financial crisis. Global financial regulators have acted proactively to regulate bitcoin. Most recently, China, once accounting for 90% of bitcoin trading volume, issued an immediate ban of ICOs and ordered the reorganisation of three major bitcoin exchanges: OKCoin, Huobi and BTCC. Over-The-Counter (OTC) transactions have not been affected. Financial authorities in certain countries have been testing state-backed cryptocurrencies.
Original languageEnglish
Pages (from-to)178-182
Number of pages5
JournalButterworths Journal of International Banking and Financial Law
Volume33
Issue number3
Publication statusPublished - 1 Mar 2018

Keywords

  • bitcoin
  • cryptocurrency
  • financial bubble
  • financial regulation
  • initial coin offering

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