June 28, 2022
Greg Cipolaro & Ethan Kochav

Quantifying the Benefits of Regulatory Clarity

Executive Summary

Regulatory clarity is often cited as a hurdle for broad institutional adoption of the cryptocurrency asset class. After all, investors are not accustomed to questioning whether their investment might be deemed a regulated security or how that might change in the future. While it is our belief that Bitcoin’s regulatory distinction is well understood in the US, the same cannot be said for the thousands of other digital assets or the myriad of services provided across the landscape. We have long held the opinion that increased regulatory clarity, provided it does not prove to be an existential threat, would be supportive for adoption and therefore prices. The theory is that once investors know the rules of the road, they can safely adhere to those guidelines, whatever they may be.

In this report, we look at the concept that increasing regulatory clarity is supportive of price and find that across most geographies this relationship holds true. In the case of China, where regulation has been existential in nature, as the country banned both mining and trading of digital assets, we find that regulation has had a deleterious impact on prices. Given that it is increasingly clear that most countries around the world, including the US, appear to be taking an approach that we categorize as “supportive but with guardrails,” this analysis furthers our belief that increasing regulatory clarity will be beneficial to price and adoption. And given that there is a lot of regulatory clarity left on the table, this could provide a tailwind to bitcoin prices going forward.


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