Cryptocurrencies as a Risk Management Tool – Legal and Economic Perspectives
Cryptocurrencies as a Risk Management Tool – Legal and Economic Perspectives

Author(s): Yordanka Noneva-Zlatkova, Mariya Paskaleva
Subject(s): Social Sciences
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: Cryptocurrencies; Crypto assets; Fiat money; Electronic money; Capital market
Summary/Abstract: The development of law is faced with many challenges, including the creation and testing of new information and communication technologies. At the same time, the law must quickly react with a set of legitimate means of regulation to guarantee legal certainty in relations. Cryptocurrencies are a manifestation product of rapidly developing technology entering civil turnover at an increasingly rapid pace. The paper aims to examine the various legal aspects of cryptocurrencies in the EU and to reveal the relationship between the stock market, investors’ decisions, and cryptocurrency. It clarifies the concept of cryptocurrency, comparing it to the millennia-old fiat money. In addition, the research traces the cryptocurrencies and their status as essential legal assets in the EU market. To test the relationship between the capital market, the investors ‘behavior, and cryptocurrency, we apply the regression model, correlation analysis, and Granger Causality Test. The explored variables include the Crypto Index (CRIX), the Sentix sentiment index, and the capital market index. We prove that the cryptocurrency market influences the stock market, which may be explained by the fact that the investors in the crypto markets are better informed than those in the traditional financial markets.

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