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Over the last year it has become evident that Bitcoin and other digital asset prices are hugely sensitive to regulatory announcements and news of governmental policies designed to control mining and force digital assets into fitting within incumbent financial frameworks. Authors believe that assessing the future potential impact of regulation involves monitoring the narrative around both international standards and local regulation.
The 2021 G7 G7 Summit is consistent on the topics of Central Bank Digital Currencies (CBDC) and stablecoins by largely copying the text from the last G7 Summit (October 2020). While the US Reserve and the Bank of England continue to release discussion papers on CBDC; the Banque de France and the Swiss National Bank are moving forward with Euro/Franc wholesale CBDC experiments. Whilst Europe is currently assessing comments received on its proposed Market in Crypto-Assets; However, the US and UK do not yet propose to offer regulation designed for digital assets. Insights on the interplay of regulation and bitcoin volatility highlight that, ironically, regulatory uncertainty is a significant cause of volatility.
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